What is a Stafford Loan?
Stafford Loans refer to a federal student loan that is available to students undertaking college education to borrow money to pay for tuition fees. They extend to post-secondary education at accredited colleges, universities, trade schools and technical schools. This includes part-time and full-time education, and undergraduate, postgraduate or professional studies. Loans are issued to eligible students who complete an application and meet loan requirements. Students are offered either a subsidized or unsubsidized loan. They do not have to be paid back until the individual quits or completes their studies.
There are two types of loans:
1. Subsidized Stafford loans, which does not accumulate interest while the borrow is at school, until repayment commences. This type of loan takes into account financial need, and is usually offered to students with the greatest financial need.
2. Unsubsidized Stafford loans, which accumulates interest as soon as the government gives out the loan. Students may obtain unsubsidized loans regardless of financial need, meaning that they are available to a larger number of students, including those who have parents who earn a high income.
Stafford Loan Requirements
Students seeking to obtain a loan need to fill in a Free Application for Federal Student Aid (FAFSA) and provide information regarding their income. The FAFSA application needs to be submitted by a certain deadline, which is dependent on the school and the state. A student’s need for assistance can be determined by subtracting estimated family contributions from costs to attend college.
Other requirements for the loan include:
– You must be undertaking studies that are least part-time.
– You need to be a US citizen, permanent citizen, or satisfy all of the US government’s requirements for eligible non-citizens
– You must not be past due with an educational loan or owe any grant.
When their financial and education information has been assessed, applicants will be notified if they are eligible for a loan. Once you are approved, the government issues a direct payment to your school in two installments: one prior to the fall semester, and one prior to the spring semester. These loan payments can be used to pay for both tuition and other related fees, and if there is any remaining money, it is paid directly to the student or credited to their account, depending on the school’s policy.
Stafford loans have borrowing limits. They can cover a student’s entire tuition fees as needed. Loan limits depend on the year of education and whether the individual is financially independent or still are dependent on their parents. The student’s school will determine loan limits, but generally, a student cannot borrow more than $57,500 for undergraduate education or more than a total of $138,500 for undergraduate and graduate education combined. Loan limits range from $5,500 to $20,500 for each academic school year. Students undertaking medical education may apply for loans with increased limits of up to $224,000.
Stafford loans offer students loans with low interest rates and repayment plans that are flexible. Repayment is not required to begin until six months after a student graduates or withdraws from the program.