The Federal Stafford Loan is another government loan available to students at colleges participating in the Federal Family Education Loan Program (FFELP). The Stafford Loan represents another one of the best loan options available, as you will see in the benefits I list below. Obviously you should go for other forms of financial aid like scholarships first, but once you get to loans, this is definitely one of the better ones. Two different types of this loan are available; the Unsubsidized Stafford Loan is offered to students both with and without financial need. The Subsidized Stafford Loan is available only to students that are determined to have financial need.
Both loans require that you complete the FAFSA, be a U.S. citizen or permanent resident, and be enrolled in school at least half-time. Students eligible for the Subsidized Stafford Loan can borrow money from both the subsidized and unsubsidized programs; for details on borrowing limits for each program, see the information on each individual program:
You will have the following benefits for both the Subsidized and Unsubsidized Stafford Loans:
-Repayment period of up to 10 years
-6 month grace period after graduation before required to start repayments
-Minimum payment of $50 per month, once payments begin
Here are specific details on each of the types on loans:
Unsubsidized Stafford Loan:
-Available to all eligible students; financial need is not a factor
-Interest Rate of 6.8% (this is the same rate that graduates will have on the loan)
-Required to pay all interest that accrues while in school, but can defer these payments until up
to 6 months after graduation
-Loan limits: Dependent undergraduates can borrow up to $2,000 per year through the unsubsidized loan.
-Independent undergraduates can borrow $6,000 their first two years, and $7,000 for their third year and beyond.
-Graduate students can borrow up to $12,000 per year.
Subsidized Stafford Loan:
-Available only to students determined to have financial need
-Both Independent and Dependent undergraduates can borrow $3,500 their first year, $4,500 their second, and $5,500 their third year and beyond. Borrowing limit of $23,000 total in subsidized loans for undergraduate education.
-Graduate students can borrow up to $8,500 per year
-Interest Rate: 2007 – 2008: 6.8%....2008 – 2009: 6.0%....2009 – 2010: 5.6%....2010 – 2011: 4.5%....2011 – 2012: 3.4%....2012 – 2013: 6.8%
-Government covers the interest while in school at least half time, or in any deferment periods
Maximum Borrowing Limits:
-I’ll sum it up here in case the above information was confusing at all:
-Through the Stafford Loan programs Undergraduate Dependents may borrow up to $31,000, of which up to $23,000 may be subsidized. Undergraduate Independents may borrow up to $57,500; again only up to $23,000 may be subsidized.
-Graduate students may borrow up to $138,500 (or $224,000 for health professionals), and up to $65,000 may be subsidized.
In the next post, I’ll discuss the benefits of the Stafford Loan Program and why you should consider it above many others.
Dec 31, 2008
