What is Stafford Loan?

October 18, 2013 by  
Filed under Loan Forgiveness Info

Students who opt for higher education often face the dilemma of not having enough capital to fund their education. Brilliant students who want to obtain higher qualifications in order to widen their job prospects find university education beyond their means. Due to the rising tuition fees and increasing cost of books and other study material, cost of education is constantly rising at a rapid pace. There is no way that a person of average or above average means can afford higher education with the existing bank balance of his family. Students have to resort to education loans from the federal government or banks. These education loans have helped many brilliant students, without a sound financial backing, to follow their aspirations and become successful professionals. Stafford Student Loan program is the name given to the Federal Guaranteed Student Loan program in honor of U.S. Senator Robert T. Stafford. He was a visionary, who made outstanding contribution in the field of higher education. Since the loans are made available at subsidized rates they are also guaranteed full faith of the US government. Though the eligibility criteria are stringent and borrowing limit is fixed, this student loan program has been in great demand among students aspiring to study in US Universities.

Salient Features of Stafford Loan Program

Students willing to avail Stafford loan program or for that matter any other federal financial aid must complete a FAFSA. They can get the loan directly from United States Department of Education through the Federal Direct Student Loan Program. No repayment of the loan is expected till the time the student is still enrolled for full/ part time course under the affiliated university. Student can enjoy extended period of deferment for six months after the completion of the course. No payment is expected till the student has secured a job within the stipulated grace period of six months. The interest rates are lower than all other loans provided by private financial concerns making it the most sought after student loan program.

Benefits of Stafford Loan Program

Stafford loan program is intended to fund deserving student to their complete higher education. The interest rates are as low as 3.4% per annum, the interest rates are adjusted annually and for unsubsidized loans rate of interest is currently close to 6.8%. In addition to this, the student can also get subsidized loan for which he does not pay any interest till the time he graduates and finds a job. Subsidized loans are however, difficult to obtain, since the student is required to meet certain criteria before he is considered eligible for such program. Financial indigence and absence of any alternate source of fund can be reason enough to get a student subsidized loan. Many students, who pursue professional courses, are however not considered to be eligible for the same. They can avail unsubsidized loans for which the student has to pay interest while attending college, he can opt to defer from immediate repayment and the unpaid amount of the loan gets added to the principal amount. .