Federal Stafford Loan

Federal Stafford loans are the most common source of education loan funds because it is the most affordable way to pay for school. If a person is an undergraduate or graduate student, Federal Stafford loans are available to them. This type of financing is usually disbursed at the beginning of each semester and the funds are paid directly to the school. The school will distribute any excess funds directly into the student campus account or directly to the student.

There are two types: subsidized and unsubsidized. With a subsidized, the government pays all of the interest that accrues prior to repayment. The financial office determines eligibility with this. An unsubsidized is where the student is responsible for the interest. The benefit of unsubsidized is that all students are eligible. To be eligible to apply for a Federal Stafford loan, a student needs only be a United States citizen or permanent resident, a high school graduate or equivalent and be a full or half time student.

The interest rates are variable and have a repayment term of ten years following a six-month grace period after leaving school. The minimum payment is $600 per year. An added bonus when applying is that a student can apply online. If elected to have payments automatically deducted from a checking or savings account monthly, a student can get a .25% plus on the interest rate. After forty-eight consecutive on time payments on the Federal Stafford loan, the student can get a two percent reduction. With the rates being lower than other forms of consumer financing, this may be the best road to embark on with education. Whether it be a Federal Stafford loan or not that a student use to seek an education, in all that they may learn, most importantly, they must, "Learn to do right and seek justice." (Isaiah 1:17)

This type of financing is non-need based, but has limits. The limit on the first year of Federal Stafford loans are $2,625, second year $3,500. The third and fourth years limits are $5,500 and for a graduate student, it is $8,500. Additionally, there is no credit check or collateral needed. Check all avenues of financing before making a decision because what is best for one person might now be the best for another person. There are many choices out there and talking with an educated financial counselor will help anyone find the ins and outs to student financing.
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