What is a Stafford Loan?
A Stafford loan is variable interest rate loan made to students based on financial need. There are two kinds of Stafford Loans: Subsidized and Unsubsidized. With a Subsidized Stafford loan, you are not responsible for the interest charged on the loan as long as you are in school as an at least half-time student. Instead, the government pays the interest for you while you are in school. Students receiving Unsubsidized Stafford loans are responsible for the interest charged on the loan while in school (the rate varies annually based on the prior year average T-Bill rates but will never exceed 8.25%). A student can choose to either pay the interest or capitalize it. Capitalization occurs on a periodic basis and compounds over time &150 meaning interest charged on the principal is added to the principal, and then interest is charged on the principal plus interest and so on. Beware; capitalized interest can be a very costly! It’s best to pay the interest if you can. Repayment of either
Federal Stafford loans are low-interest loans made to college and career school students by lending institutions, such as banks, savings and loan associations or credit unions. The U.S. government offers these loans through the Federal Family Education Loan Program. The first step to obtaining a Stafford loan is to complete the Free Application for Federal Student Aid (FAFSA).
These loans are for students borrowing on their own behalf. There are two types of Stafford Loans: subsidized and unsubsidized. • Subsidized means the government makes the interest payment on your loan while you are in school, grace period or deferment. • Unsubsidized means that you are always responsible for interest payments, even while you are in school. For more detailed information about the Stafford Loan program click here.
Stafford Loans are among the most popular and available of education loans. If you’re a graduate or undergraduate student enrolled in an eligible program of study on at least a half-time basis, you can apply for a Stafford Loan. Two types of Stafford Loans are available–subsidized and unsubsidized. With a subsidized Stafford Loan, the federal government pays the interest on the loan while you’re in school, for six months after graduation, and during any approved deferment periods. To qualify for a subsidized Stafford Loan, you must demonstrate financial need. Therefore, not everyone is eligible. Your financial need is based on the income and asset information you supply on the federal government’s financial aid application, known as the FAFSA. With an unsubsidized Stafford Loan, you are responsible for paying the interest that accrues during the school year, in the six-month period after graduation, and during any deferment periods. Unsubsidized Stafford Loans are not based on financi
