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. Sometimes, the loan will not be enough to pay for the entire education costs and you may need to find financial support elsewhere.
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. Based on demonstrated financial need, the government pays for the interest rates while you are studying. 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.
A better alternative to Stafford student loans are Perkins loans that have a 5% interest rate and are granted to students with the direst financial situation. Nevertheless, we need to stress out once more that both these types of federal government loans are not enough to cover all the educational expenses particularly if we think of the number of degrees one may want to take: BA, MA and PhD. 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 loan consolidation, some people will even choose to make home equity loans to pay for education.