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For college students, financing their education is often a big
obstacle. However, there are many alternatives available which will
help almost any student, regardless of their high school academic
achievement, pursue further education. One of those options are
Stafford loans.
The Basics of Stafford Loans
Stafford loans are part
of a government loan program which makes it easy for college students
to finance their education. These loans are available to all students
who are attending a government-recognized college or university,
regardless of the student's credit history, financial situation,
or academic performance.
Stafford loans are distributed through two programs. Which program
students use depends on their school. The first program is the Federal
Family Education Loan Program (FFELP) and the second is Federal
Direct Student Loan Program (FDSLP). The difference is that FFELP
loans go through a financial institution while FDSLP loans come
directly from the government. Both programs have the same rules,
interest rates, etc.
Two Types of Stafford
Loans
Stafford loans come in
two types. The first is subsidized loans. With these loans, the
interest that accumulates while the student is in school is covered
by the government. Subsidized Stafford loans are only available
to students who have financial need.
With unsubsidized loans,
the student is responsible for the interest that continues to build
while he or she is in college. However, the student does not have
to pay that interest. Instead, it can be added on to the loan's
principle amount until the student has graduated. Unsubsidized Stafford
loans are available to all students.
Stafford Loans: Amounts & Repayment
Students cannot borrow an unlimited amount of money through Stafford loans. Yearly and
lifetime limits are in place to prevent students from overborrowing.
First-year independent students, for example, can borrow up to $6,625
while third and fourth year independent students can borrow as much
as $10,500 per year. Dependent student limits are lower.
No matter how much
money in Stafford loans the student borrows, the loans must be paid
back in full. Repayment usually begins six months after the student
graduates or drops below part-time status.
References and Links
Students can learn more
about Stafford Loans by visiting The
Student Guide web site or reading "Financial
Aid".
Information about other
forms of financial aid is available by reading "PLUS
loans" and "Private
Student Loans."
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