Stafford College Loan

A recent article in USA Today claimed that students were not applying for federal financial aid, in the form of a Stafford college loan, before turning to private lending companies.The article, titled “Students Often Overlook Federal Loans That Are Great Deals,” cites recent legislation which created fixed interest rates on federal loans. The article’s author notes, “Stafford loan borrowers will never have to spend more than 15% of their discretionary income on loan payments.”

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Most students qualify for some type of financial aid from the government. There are only a few very basic conditions to meet.

Stafford college loan criteria:

• The student must be a U.S. citizen, permanent resident or eligible non-citizen.
• To qualify for a subsidized Stafford loan, the student’s school needs to determine his or her financial need.
• The student must be enrolled in a degree-granting institution at least half-time
• The student must not owe a refund on an education grant or be in default on any previous education loan.
• The student must fill out his or her FAFSA application by the deadline.

The Stafford college loan has lower, fixed-interest rates and repayment plans which are far more flexible than those of its privately offered counterparts. The Stafford College Loan grants borrowers the same six-months after graduation grace period as almost all other student loans as well.Even furthering the ample advantages of the loans, the government offers “loan forgiveness” incentives for graduating students working in low-income teaching fields and other public assistance duties. Yet, despite the many advantages of the Stafford college loan, a study completed by the American Council on Education (ACE) in 2007 found one in five undergraduate students applied for private loans without first taking full advantage of the federal loans available to prospective collegians.

The Department of Education and all other financial aid-awarding entities use the Federal Application for Student Aid, or FAFSA, to determine a student’s financial status.The application can be completed online or by mail.Students may request a paper form by calling the Department of Education’s toll free number.The FAFSA deadline is always June 30.

While, at eight pages and over 100 questions, the FAFSA application may seem lengthy and somewhat time-consuming, the rewards from a Stafford college loan make it well worth the time and effort. Unlike loans offered by private lending companies, the Stafford loan has a low 6.8 percent fixed-interest rate partially in response to the Deficit Reduction Act of 2005.Because of this federal legislation, the challenge tracking exorbitant and rising interest rates is erased.

Another perk of having a federal loan is the four flexible repayment plans offered by the Department of Education. Students can choose the standard option and pay a fixed monthly bill for 10 years. In other formats, the opportunities to gradually increase monthly payments to fit the natural growth of the student’s income or to have an income-sensitive plan, in which payments reflect the rise and fall of the student’s income, also exist. Another typical repayment method, the extended repayment plan, is drawn out over 25 years of fixed or graduated payments and is available to those students with more than $30,000 in college debt. Students are also able to consolidate federal loans into one easy monthly payment.

According to statistics published in 2006 by the US Department of Education, almost 50 percent of American undergraduate students receive some form of financial aid from the government.Yet, a whopping one in five students apply for loans from a private lender without ever knowing the benefits of a federally financed Stafford college loan.Even more astonishingly, many prospective college students choose career paths offered in the loan forgiveness program by the Department of Education.Teachers, especially those working in inner-city schools, military personnel and other public service workers are often eligible for certain amounts of loan forgiveness.Read further within this site for more information on specific eligibilities today.

Need more information on the Stafford College Loan?
Find out about the Stafford College Loan today.