Federal Stafford Student Loans

Stafford student loan correspond to a financial aid federal program that comes to the help of needy people who want to continue their education. Low income is the main criterion of eligibility for Stafford student loans. Other elements or advantages that define this money lending system is the low interest rate, the possibility to defer the payment for after the school years as well as the chance to consolidate all the educational loans. There are nevertheless limitations to this kind of loan and they are first and foremost noticed in the amount of money provided. Sometimes, the loan will not be enough to pay for the entire education costs and you may need to find financial support elsewhere.

In order to qualify for Stafford student loans you must first fill in a FAFSA which is an application form that also allows you access to all sorts of scholarship and federal grants. With the additional sum of money and the loan, you’ll be able to pay for college or university education. You will start repaying your debt, six months after you graduate. This period during which no payment occurs, bears the name of grace period.

There are two categories of Stafford student loans, some subsidized and others unsubsidized. Based on demonstrated financial need, the government pays for the interest rates while you are studying. In the case of unsubsidized Stafford student loans, the interest rate corresponding to the years of study, accrues and capitalizes to the initial debt.Most loans have the rate set at 6.8% which is considered a fixed value for most loan providers in this federal government system. In some cases, even lower rates than the standard are possible.

A better alternative to Stafford student loans are Perkins loans that have a 5% interest rate and are granted to students with the direst financial situation. Nevertheless, we need to stress out once more that both these types of federal government loans are not enough to cover all the educational expenses particularly if we think of the number of degrees one may want to take: BA, MA and PhD. Therefore, other sources become necessary for financing either from personal income and savings or from study-work conditions. When they don’t qualify for Federal stafford student loans, some people will even choose to make home equity loans to pay for education.