Stafford Loans

If you’re looking for information on how to apply for a Stafford loan, and other information related to Stafford loan eligibility, interest, and repayment, you’re in the right place.  The realm of federal student loans can get quite overwhelming, but we’re here to give you the information you need to choose the best option for your situation.

To understand the application process, it is helpful to also understand the intricacies of this type of loan specifically, as many of the details related to Stafford Loans stem from the unique purpose behind offering these loans.  Below are a few things to know about these loans before learning how to apply for a Stafford loan.

• A Stafford Loan is a special type of student loan which is offered to students of higher education who demonstrate financial need
• Stafford loans are unique in that that the US Government guarantees repayment of the loan to the lender, in the case that the student defaults on their loan payments
• Because repayment is guaranteed, lenders are able to offer these loans to students at a greatly reduced interest rate
• As a result of this lowered interest rate, strict eligibility requirements must be met in order for students to be approved for the receipt of a Stafford Loan
• Stafford loans are available as either subsidized or unsubsidized loans
• Interest on subsidized loans is paid by the government during the time a student is in school, as well as during the grace period and any authorized deferment periods
• Students are responsible for the interest accrued on unsubsidized loans, but may defer payment on this interest until after graduation

Stafford Loan qualification and eligibility
Once you know how to apply for a Stafford Loan, you will want to determine eligibility.  To be eligible for a Stafford loan, students must meet a number of minimum requirements.  They are as follows:

• Student must be a U.S. citizen, eligible non citizen, or permanent resident
• Student must be enrolled at least half-time in a degree seeking program at an accredited university or institution of higher education
• Student must maintain a satisfactory academic record showing steady progress in order to remain eligible for this type of loan

Subsidized Stafford loans are based on financial need, while unsubsidized Stafford loans are not, so this can also affect eligibility for each of these types of loans.  Beyond these minimum requirements, students are required to fill out and file the FAFSA form to determine final eligibility, which can be done here: http://www.fafsa.ed.gov/.

Stafford Loan Interest Rates
Now that you have learned how to apply for a Stafford Loan and have also determined that you meet the eligibility requirements, you may want a few more specifics.  As mentioned above, Stafford Loan interest rates are much lower than that of a typical private loan.   See the breakdown below for more details.

• Unsubsidized: rates are currently at a fixed rate of 6.80% through 2013.
• Subsidized:  rates can range anywhere from 3 to 7 percent currently.  For the 2011-2012 academic year, interest rates for subsidized Stafford Loans are at 3.40%.

Stafford loan Repayment
As with many types of student loans, there are several different options when it comes to repaying a Stafford Loan.  If you learned how to apply for a Stafford loan with ease, repayment will be no problem for you.  See below for a list of common repayment options.

• Standard repayment plan:  involves set monthly payments which remain even throughout the life of the loan repayment, and are never less than the amount of monthly interest accrued
• Graduated repayment plan: payments are lower for a set amount of time when the borrower first begins to repay the loan, and jumps to a higher amount after this period of time expires
• Income based repayment plan: payments are set based on the borrower’s current income, and can fluctuate as this income level changes

Stafford loan Consolidation
Learning how to apply for a Stafford loan and receiving funding is just the beginning of the process.  After graduating from college, borrowers must start the repayment process.  To make sure you are getting the best payment rate possible, you may want to look into Stafford Loan consolidation.  This is a process which allows borrowers to consolidate all of the Stafford loans they are responsible for into just one loan, which can help decrease monthly payments significantly.