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Federal Stafford Loan Overview

November 20, 2011

Federal Stafford Loan

For those of you who don’t know much about the Federal Stafford Loan Program, it is part of the Federal Family Education Student Loan Program (FFESLP), that is funded by the governement, and can be applied for by filling out a Free Application for Federal Student Aid (FAFSA) where the loan amount you will get will be based off of your Expected Family Contributino (EFC). Stafford Loans provide the eligible applicant with the benefit of having a fixed interest rate throughout the life of their loan repayment, meaning if you begin paying on a 5 percent interest rate, you will pay every single payment on 5 percent until you have paid the loan back in it’s entirety. Federal Stafford Loans are offered for both undergraduate as well as graduate students, which below is an overview on each category.

Federal Stafford Loan

Federal Stafford Loan For Undergraduates

When an undergraduate receieves financial aid through the form of a Federal Stafford Loan, they can borrow form limits that range from $$2,000 to $12,500 each year of school which limits increase every year of school completed, which depending upon which year a student is in, and will have a loan experience that includes the below points, which are all applicable if a student agrees to enroll at in a minimum of a half time school schedule:

  • Loan deferment while in school, meaning the student doesn’t have to pay the loan off while in school.
  • Applicants do not have to have a good credit score, as Stafford Loans are not granted based of your credit score.
  • Rates start at as low as 3.4 percent, which are the lowest out of all the federally funded grant programs.
  • Loans come in the form of both subsidized, which loans are granted on the degree of your financial need as well as unsubsidized, meaning it is not based off of financial need.
  • Interest is paid starting when the student either graduates or drops out, and does not accrue, or buid up while they are in school.

Federal Stafford Loan For Graduates

For graduates applying for Stafford Loans, they are able to take out up to $22,500 per school year and also come in the form of subsidize and unsubsidized, where students again have to be enrolled in at least a half time school schedule. The loan experience will include:

  • Not having to pay loan payments while they are in school and begin usually at 6 months after graduation or dropping out.
  • No interest is charged while in school for subsidized loans, but for unsubsidized Stafford Loans, interest is either to be paid while you are in school, which is highly suggested, or let is accrue and pay it when you graduate. For examples sake, if one takes out $10,000 dollars, they will have to pay about $750 dollars in interest, which will accumulate on the loan total and one will have to pay interst on that as well.
  • Interest rates that are fixed and start at a minimum interest rate of 6.8 percent.

For the subsidized Staffor Loans, it is said that two thirds of the loans go to students who have Adjusted Gross Incomes that do not exceed $50,000 per year, while one fourth go to those who have Adjusted Gross Incomes between the range of $50,000 to $100,000. So if you meet these requirements, there is a good chance that you will be able to qualify for the subsidized Stafford Loan, which provides the benefit of coming with a much lower interest rate. But if not, you can still receive funding through the unsubsidized option. For either option, a 1 percent loan activation fee will be charged, where once you qualify for the loan, the money will be sent to your school and you will deal with your schools main office when you need funds for schooling costs.

For repayment of Federal Stafford Loan debt, there are 5 different repayment options, which include the standard repayment, extended repayemnt, graduated repayment, Income Based Repayement (IBR) and Income Contigent Repayment (ICR).

 

 

All About The Stafford Student Loans

August 27, 2011

The Stafford Student Loans

Since you have come to this page, you probably have heard about Stafford student loans, as they are one of the biggest federal loan lender programs around. They offer you the chance to go to college on their dime if you are unable to afford it, which is a great benefit, but are Stafford student loans worth it? Well below you will be given information on both types of loans that they offers as well as a list of both the pros and the cons when it comes to taking out Stafford student loans so you can decide for yourself whether to say yay or nay.

Stafford Student Loans

Stafford Student Loans – Two Different Types

SUBSIDIZED STAFFORD STUDENT LOANS

The first one we will talk about is the Subsidized Stafford loan. This Stafford student loan chargest absolutely no interest during the time where you are in school, which means that government picks up the bill, paying your interest for you. If this sounds to good to be true, well it kind of is as this loan program is solely based on the financial need of the applicant, meaning that not everyone will qualify, or those who need it most tend to get it first. Your eligbility is also determined by if you or your parents fall in to the correct tax bracket, and with the subdidized Stafford studetn loans, the school you are going to attend will determine how much you get in the form of grant money.

UNSUBSIDIZED STAFFORD STUDENT LOANS

If the above doesn’t quite suit what you are looking for, the other option is the unsubsidized Stafford student loans. The great thing about this program is that pretty much everyone is gauranteed to qualify for this option, but unlike the subsidized option, ubsubsidized Stafford student loans require that you pay interest right off the bat, or as soon as your loan is issued. This option can be great for people who dont qualify for the subsidized option, and can pretty much get the same benefits as subsidized option by paying just the interest payments while you are enrolled in school. That way when you get out of school, you are left with just the loan, and not the accumulated interst for the years that you were in college. The ammount of money you will receive is also decided by the school you wish to attend.

Stafford Student Loans – Pros & Cons

Now that you know some of the details of both the Subsidized and Unsbsidized Stafford student loans, there are overall pros and cons that come with choosing each one of them. Here are the pros and cons of Stafford student loans:

PROS

  1. They are not credit score based.
  2. Their loans are lended at a fixed rate which means no compounding interest, your rate will always stay the same. Current fixed rates between 2010 and 2013 are at 6.8 percent.
  3. They offer loan repayment or also know as loan forgiveness where you can work a public service job, or to the likes of it, and get the chance to get a lot of your debt forgiven, or deleted essentially at the end of your public service term. Usually this is whatever is left after 120 on time payments.
  4. When you go to pay back the loan, they offer you the freedom to tailor a payment schedule that fits what you can afford.

CONS

  1. Bankruptcy is not an option on Stafford student loans or any federal lender that you go through.
  2. Being that they are fixed rates, there also is a negative side of that, as if the median fixed rate drops, your rate will stay at what it is when you took out the loan.
  3. Government loans stay in your credit record forever, so you must make sure to make your Stafford student loan payments on time.

Stafford Student Loans – Conclusion

The last thing that you need to know is that you should leave about 2 months time before you need the grant in order to fill out the Stafford student loans paperwork, which there is a lot of it. Also, you will needed to fill out a FAFSA which means Free Application for Federal Student Aid, which is madatory for all applicants.