About Federal Stafford Loans
Known as a typical student loan in the United States, Federal Stafford loan is available to most eligible students who enroll in accredited American institutions of higher education.
This type of loan is under the administration of the United States Department of Education and offers favorable financial assistanc for all the applicants.
Are There Any Borrowing Limits for Federal Stafford Loans?
Actually, students are not allowed to obtain whatever they want for federal Stafford loans. Federal Stafford loans have strict borrowing limits for the applicants. Different kinds of students are only allowed to obtain certain amount of loans within the maximum sum. Here is a brief overview on the maximum amounts for various students:
- Freshman – The maximum amount for dependent freshman is $3500 and $7500 for independent freshman
- Sophomore – Dependent sophomore can obtain as much as $4500 but independent students can get up to $8500
- Junior Students – $5500 for dependent students and $10500 for independent ones
- Graduate and Professional Degree Students – Both dependent and independent students can obtain as much as $20500 per year
- Lifetime Limitation – This principle applies to all the students, no matter dependent or independent, freshman or graduates. No student is allowed to obtain more than $138500 for the total sum of federal Stafford loans during his/her school careers.
Dependent students are those who live with parents. And independent students are referred to those who live on their own in school. They enjoy different bonuses on the amounts of federal Stafford loans.
Interest Rates of Federal Stafford Loans
The interest rates for federal Stafford loans are determined by United States Department of Education. They are much lower than other types of loans. The current interest rate for federal Stafford loan was issued at the year of 2006. The number is 6.8%. According to some investigation, the interest rate during 2011-2012 school years is 3.4%.
Apart from the interest rates, students also have to pay a loan fee for a federal Stafford loan. The amount of the loan fee would be 4% of the total loan sum. The percentage may vary every year, but it will reach no less than 1%.
Who is Eligible for Federal Stafford Loans?
As we have mentioned, federal Stafford loan is only available to students. But it does not mean that all the students enroll in accredited American institutions of higher education are eligible to obtain this mortgage.
Only those who meet the following requirements are able to apply for a federal Stafford loan:
- Be enrolled in accredited an American institution of higher education
- Be enrolled at least for half a semester
- Be enrolled in some certain units that are indicated in some financial aid summary
- Maintain very satisfactory academic progress in school
- The applicants must have financial needs(which is usually determined by the school)
How to Obtain a Federal Stafford Loan?
If you meet most of the above qualifications, you are allowed to apply for a federal Stafford loan now. You need to finish only four simple steps to successfully receive a federal Stafford loan:
- Step 1. Complete a request form (which can be downloaded at the official web site of your school). You are required to complete all the personal information on the form, which is a good way to check your financial aid status. You will receive an e-mail for confirmation if your application is approved.
- Step 2. Sign your promissory note online under the “Student Loans” category. You will have to sign your personal identification number (which can be obtained from the Department of Education after your application is approved). This is very important for you to receive the loan.
- Step 3. After the above two procedures, you are much more close to success. Then you will need to complete another form offered by the Student Loans Department of your school. The department needs to put your information on the record in order to issue the loan in time.
- Step 4. If you are applying for the federal Stafford loan for the first time, you must attend an in-person counseling session. This would help you learn more about the details of your loan, the interest rates as well as something related to payments.
If you are looking to work in public service sector, you will find that the reward is not only emotionally – but also financially in some cases. Don’t you believe it? You know the College Cost Reduction and Access Act of 2007 created the Public Service Loan Forgiveness (PSLF) program for people who pursue public-service careers.
In some cases, you may go through a hard time to pay back your loans (including federal Stafford loans). If you fail to pay your loan provider as scheduled, your loan will eventually default. Once default occurs, there will be negative consequences.
Indeed, since July 1, 2010, federal Stafford loans (and other student loans available from FFEL program) are no longer available. Instead, Direct Subsidized / Unsubsidized Loans, as the main federal student aid program currently, are offered to college students. However, you should know that the federal Stafford loans (or other FFEL loans) made before July 1, 2010 still remain active.
If you are taking out a federal Stafford loan, you must be familiar with Free Application for Federal Student Aid (known as the FAFSA). In fact, all federal student loan carriers are aware of the FAFSA. This is because, for a student in need of federal financial aid, it is a necessity. Properly speaking, completing the FAFSA is the first step towards getting federal financial aid for college, career school or graduate school.
In fact, whether Stafford loans or Direct loans, both of them are the most common options for federal student loans. However, the former were the most popular before July 2010, while the latter were after July 1, 2010.
If applying for financial aid in school, you should know that student loans are usually part of your financial aid package. Generally, there are two types of student loans
Are you finding it extremely difficult to pay your federal Stafford loan? If so, you can consider the option of student loan forbearance, to avoid damaging your credit with late or missed payments. If your lender grants you a forbearance, this means you are allowed to temporarily postpone the payment on your federal Stafford loan.
Many students borrow for their education through the federal government’s Stafford loan program. When you are on the verge of graduation or otherwise leaving school, this means it is time that you had to start repaying your Stafford loan.
Under some circumstances, you may go through a hard time to pay back your loans (including federal Stafford loans). Such circumstances may include economic hardship, unemployment, continuing education, military service or community service and temporary or total disability.
Although interest rates on Stafford loans are not that high, you may feel overwhelmed by debt at some point in your lives, especially for those taking out multiple loans. Thus, you may consider a consolidation to ease the financial burden.