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. The payment deferment options, the low interest rate and the chance to consolidate education loans represent the main advantages of Stafford student loans. There are nevertheless limitations to this kind of loan and they are first and foremost noticed in the amount of money provided. 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. This additional sums of money could in fact provide the alternative financing sources when you lack the means to pay out of the pocket. You will start repaying your debt, six months after you graduate. This period during which no payment occurs, bears the name of grace period.
There are two categories of Stafford student loans, some subsidized and others unsubsidized. Starting from demonstrated financial need, students can get all the interest for the loans paid by the government in the form of subsidized loans. If the loan is unsubsidized, the interest accrues during school enrollment and is added to the initial debt in the process known as capitalization.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, you’ll have to finance your studies out of the pocket, from personal savings or study-work solutions. When they don’t qualify for Stafford student loans, some people will even choose to make home equity loans to pay for education.