Designed by the federal government to assist people with the education payment, Stafford student loan are widely appreciated across the United States. 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. Limitations do exist in the system, particularly since the money is not always enough. You won’t be able to pay for your education from the loan alone and you’ll need to find ways to supplement funds.
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. The repayment for the Stafford student loans starts six months after graduation or school withdrawal. The education period during which no payment is required is usually referred to as the grace period.
Stafford student loans can be classified in two categories: subsidized and unsubsidized. Based on demonstrated financial need, students can get all the interest for the loans paid by the government in the form of subsidized loans. 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. Even lower rates are possible with some other programs.
Perkins loans have a 5% interest rate and they are considered more advantageous than Stafford student loans. Yet, neither of these two federal loan systems will be able to cover all the undergraduate, graduate and post graduate degrees. Therefore, other sources become necessary for financing either from personal income and savings or from study-work conditions. Some families go as far as making home equity loans when their children do not qualify for stafford student loan consolidation.