Stafford Student Loan
If you are planning for further education and are lacking enough funds then you can easily apply for a Stafford Loan. The Federal Stafford Loans are student loans given out by the government. The Department of Education is responsible for giving out these loans. These loans are offered a low interest rates and anyone who is planning for education in a college or university in the U.S can avail these loans.
Besides the Federal Stafford Loans the private institutions and banks also offer Stafford Loans. But these loans are made available through the federal family education program. So even in this case the fund is made available by the government. However these loans would offer you a lower interest rate in comparison to the federal Stafford loans. When looking for student loan there are some colleges and universities that would have their own student loans programs. In such cases also the government gives out the loan programs under the Federal direct loans. The government would give the funds to the university and the university would then give it out to the student. However when you go for such programs you would not get to compare the offers from various lenders to pick which Stafford student loan would be the best for you.
The interest rates on these types of Stafford loan differ from one school to another so you can check before taking admission the interest rates with the particular schools. When talking about Federal Stafford Loans there are again two types:
Unsubsidized Stafford loan: These loans are given to students without assessing their financial capacity. The interest rates are charges when the student starts college or university. However the student is allowed to accumulate the interest rate and pay it off with the principal.
Subsidized Stafford loan: These loans are given out to students after assessing their financial capacity. The interest rates on these loans are charged after the student finishes his or her education. But these loans are difficult to qualify and not every one qualifies for these loans. Before you apply for these loans you should check with your school for the requirements that are needed to qualify for these loans.
When you wish to apply for the Stafford student loan then you are required to complete the Free Application for Federal Student Aid (FAFSA). This is the form that is required to be filled every year by students who are either studying or are planning for studies in both graduate as well as undergraduate courses. There are times that the parents are also required to fill out the form to assess their financial condition. This form has various questions pertaining to the financial condition of the student and the family. These figures are then used to calculate the Expected Family Contribution. The Expected Family Contribution can vary based on a number of factors.
Other factors like the school that the student wants to attend and the state in which he or she resides would be used to determine whether the student would be eligible for state aid apart from the federal aid.
The Student Aid Report would contain the summary of the student financial aid formation and the expected family contribution. This is forwarded to the schools that are mentioned by the student. After this the school would determine the financial aid that should be given to the student.
As mentioned that the Stafford student loan is made available to the students either from the:
U.S Department of Education
The Federal Direct student loan program
Federal family education loan program
With the Stafford student loans there is no payment to be done while the student is still studying or even six months after the student has either graduated or dropped out of the educational course. The interest rate charged on the Stafford student loan is divided into two parts. When the student is pursuing education and during the grace period the interest rate is low but once the repayment period starts then the interest rates starts increasing.
Previously the interest rate on the Stafford loan was based on an adjustable formula. With this rule the rates were adjusted annually and were based on the 91-day T-Bill. But since 1st July 2006 all the Stafford loans are issued at fixed interest rates. For most of the loans providers and the direct loans the rate is set at 6.08% presently. With the present rates being effective some of the loan providers are foregoing the margins that they are entitled for under the Federal program.
It is often seen that students cannot keep up with the payments towards the Stafford student loan on time. In such cases they can opt for Stafford student loan consolidation. With the help of these loans consolidation programs you can combine all the student debts into a single payment at a lower interest rate so that the payments can be met easily. With such options you are required to look for a loan company that would be ready to take all your Stafford loans and give you a loan at a lower interest rate. Besides this the government also makes it possible for the students to opt for Federal Stafford student loan consolidation.
Stafford student loans are a good option for students who cannot afford to meet the education costs. These loans are a good option and can be availed easily. However if you wish to apply for these loans you are required to do the groundwork and you should make sure that you fill the application on time.
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