A Guide To Perfect Student Loan

Published on: Tue, Dec 29, 2009

Classified as: College Loans, Student Loans

There is no perfect loan because every loan should have to be paid back but Stafford Loan comes pretty close to perfect. Stafford Loans are better, most common and almost every student qualifies for it.

Guide to student loans

Stafford Loans can be called near to perfect because of following features:

Lowest Interest rate
Almost every one qualify for it
Undergraduate and graduate both may qualify
While student is in school then government pays interest on subsidized Stafford loan
Every year students qualify for higher annual limits
For Stafford Loans no credit check is required
Grace period of six months after graduation

Explanation of Stafford loan

Stafford Loans are the government guaranteed loans that you can borrow through the Federal Direct Student Loan program or through a lender that participates in the Federal Family Education Loan Program (FFELP). Federal Loans are designed to provide almost every American student some form of financial, low cost aid.

There are two types of Stafford Loans.

Subsidized Stafford Loan
Unsubsidized Stafford Loan

Subsidized Stafford Loan

The Subsidized Stafford Loan is need based and for students are not required to repay while they are in school and also 6 months grace months period is given after graduation. In that 6 months grace periods graduated student can stand up on his own feet financially. In that grace period and during student is in school government pays the interest for the loan. But one the grace period of 6months is over then borrower must start repaying the loan according to the loan terms.

Unsubsidized Stafford Loan

Unsubsidized Stafford Loan is non-need based and its offered or awarded to more students than the subsidized. Mainly students carry both types of Stafford Loans. After the disbursement of loan students are responsible for accrued interest as soon as possible, but may opt defer these payments until after graduation. Same like subsidized loan, unsubsidized Stafford loan is also having 6 months grace period. After the end of 6 months grace period borrower must begin repayment according to the terms of the loan.

Interest Rates and Fees of Stafford Loan

The Stafford Loans originated before June 30, 2006 are having variable interest rate, the rates are adjusted annually and capped at 8.25%. While Stafford Loans originated after July1, 2006 are having fixed 6.8% interest rate. Till 2012 fixed interest rate on subsidized Stafford Loans will reduce to 3.4% ensuing that there are some the lowest cost loans available.

Requirements for a Stafford Loan

Almost every student qualifies for Stafford Loans even if you think you may not be eligible for the Stafford loan, even then you should fill out the FAFSA.

Basic Eligibility Requirements for the Stafford Loan are:

Fill out the FAFSA
You must be U.S. citizen or permanent resident
Enrolled at least half time in college.
Subsidized Stafford Loans are need-based so you must meet the income requirements for the need-based aid.

Applying for a Stafford Loan

Applying for Stafford Loans you must fill out the FAFSA. You will be notified if you are approved for need based subsidized Stafford Loan funds. You can apply for unsubsidized Stafford Loan funds over and above any subsidized funds for which you’ve been approved.

After choosing a student loan lender you will complete the Master Promissory Note for the Stafford Loan. In this document there are all details about the loan, including your repayment responsibilities and terms.

Repayment of Stafford Loans

There is a six months grace period for both subsidized and unsubsidized Stafford Loans. During this 6 months grace period you are given information on repayment and reminded of loan terms and details of payment.

At any point you face any problem regarding repaying a federal loan you can apply for a federal consolidation loan.

Make sure to complete FAFSA so that you can apply for all the possible federal aid. Stafford loans are one of the most affordable student loans for which you can qualify.