Title: Stafford Loans - An Overview
Category: student loans
The Stafford Loan is one of the most well-known, popular student loans
available today. There are both subsidized Stafford Loans and
unsubsidized Stafford loans available, from a variety of lenders. Before
a student decides what kind of Stafford Loan might be best for him or
her, it is first important to know a little bit about Stafford Loans -
where they come from, what they are, and what they do.
Stafford Loans have been around for quite a while. Formerly known as the
Federal Guaranteed Student Loan, Congress renamed it in 1988, after a
senator from Vermont named Robert Stafford, who worked tirelessly for
higher education. From there on in, it became known as the Robert T.
Stafford Loan - or, more commonly, simply as the Stafford Loan.
Naturally, Stafford loans are student loans. They are offered only to
those students who are attending accredited American universities, and
they are there to help finance a student's education. Among other things,
this loan guarantees that a student will pay back the lender of his or
her Stafford Loan even if - and especially - if he or she defaults.
Stafford Loans are guaranteed by the government of the United States. As
such, the interest rates for Stafford Loans are significantly lower than
those offered by private loans. Perhaps to balance the low interest
rates, Stafford Loans come only with very strict requirements for a
student's eligibility. As well, there are often strict limitations on the
amount a student can receive from a Stafford Loan.
Before ever applying for a Stafford Loan, a student must completely the
FAFSA - Free Application for Federal Student Aid - form. Students can
receive Stafford Loans a number of ways, including getting them through
the Federal Direct Student Loan Program, or as private loans, through the
Federal Family Education Loan Program.
Stafford Loans employ what is known as an in-school deferment. This means
that students receiving a Stafford Loan are not required to pay the loan
back as long as they are attending college. It does not matter whether
they are full-time students or part-time students. In addition to that,
students have a grace period - generally lasting six months - following
their graduations from college, during which they are not required to pay
back their Stafford Loans. This also applies if a student is forced to
fall below part-time status or to withdraw from school altogether.
Stafford Loans can come in two different forms: as subsidized loans and
as unsubsidized loans. With a subsidized Stafford Loan, the government
covers the interest while a student is attending college, during the
grace period following graduation, and during any approved deferments -
such as an unemployment deferral. Furthermore, the amount of a subsidized
Stafford Loan depends solely on how much financial aid a student needs.
When a student has an unsubsidized Stafford Loan, he or she must pay all
the interest for their loan while they are attending school. While this
interest can also be deferred while the student is in college, it is
added onto the loan principal, to be paid later.
This is merely a glance at Stafford Loans, known for their fairness when
it comes to interest rates. Despite their strict eligibility
requirements, it is fairly easy to qualify for a Stafford Loan, thanks in
part to Robert Stafford's strong interest in helping students who wish to
further their educations.