The thought of going back to college can bring about a lot of different emotions. You may be excited to start this next part of your life journey. At the same time, feelings of nervousness about leaving home are also pretty common. One of the biggest fears that people have about going to college is that they will not be able to afford it. As you know, college courses can be expensive. The good news is that there are many programs available to help you make the financial transition to college a breeze. The Stafford Loan program can help you take the worry out of the financial aspect of going to college.
So what exactly are Stafford Loans? Stafford Loans is a government-based student loan program. It is one of the most commonly used programs of its kind. The loan comes in two different forms – subsidized and unsubsidized. Choosing the right one depends on your needs while you are in school.
If you get a subsidized loan, you can borrow up to $8,500 per year, and the government pays the interest that occurs while you are in school. With the unsubsidized loan, you would be responsible for the interest while you were in school. However, you could get more up to $12,000 per year. I would talk with a trusted advisor to see which type of loan is the right fit for you.
Most students wanting to enter a higher education school are able to receive a loan through the Stafford Loan program. Below are the qualifications that must be met.
* You must complete and turn in the Free Application for Federal Student Aid (FAFSA).
* You must be a permanent resident of the U.S., a U.S. citizen or an eligible non-citizen.
* You must plan to be enrolled at least part-time in a higher education setting.
* You must be accepted to a Title-IV eligible school.
* You may not be in default on a previous education loan.
The big question is how you go about getting accepted for a Stafford Loan. The first step is to fill out a Free Application for Federal Student Aid (FAFSA). The school will then determine if you meet the qualifications to apply to a Stafford Loan. You will know that your application has gone through by receipt of a letter in the mail. The applications for the FAFSA and Stafford Loans are typically accepted January through June. Check with your local college to confirm the dates as they can differ from state to state.
Once your FAFSA has been approved, you can then apply for the Stafford Loan through their website. It is imperative that you remember to renew each year you wish to continue your education.
Education is a big part of your journey through life. As scary as the financial piece can seem, Stafford Loans help make going from home to college a smooth transition. I hope this article helped you to discover ways to make getting a college education more affordable.
The Department of Education recently overhauled its loan program with help from Congress. In 2012, the rates on subsidized Stafford loans were scheduled to nearly double in some cases. However, President Obama successfully brought the loan situation to a platform of national debate and this year will see loan interest rates become based on the market. The bill in question links interest rates on both PLUS loans for parents and graduates and Stafford loans to the 10 year Treasury note. The rates will be determined every first of June and then locked in for the life of the loan. At current rates, students for the upcoming fall sessions will be locked in at 3.8 percent for subsidized Stafford loans and 5.4 percent for unsubsidized loans. The compromise has both good and bad qualities for students, according to education experts.
The good news is that this bill lends stability to a process that has led to political showdowns in the past. This fact keeps students from being surprised on rate hikes or changes due to waiting for Congress to act. The bill also does not have an expiration date. The rates are locked in every year. It also has universal effect. All federal loans are eligible for rate reduction and locks. Repayment plans are becoming more generous to help alleviate the likely higher interest rates. Continue reading “New Rules for Student Loans” »
For a long time Stafford Loans with low interest rates have been a popular way for college students to pay for their education. These low interest rates have traditionally been among the reasons for their popularity; historically speaking, they have been low because the loans have been secured by the federal government. The fact that the government secures the loans also means that the borrower’s credit score has played no part in their eligibility.
About Stafford Loans
Stafford loans may be subsidized or unsubsidized. Subsidized loans have no interest charged until the student leaves school. With unsubsidized loans, interest is charged from the point at which the loan is disbursed until it is completely paid off.
Benefits of Subsidized Stafford Loans
• The interest is paid by the government for students who are enrolled in school at least half-time.
• Interest is paid by the government in cases where borrowers have been authorized to defer their loans.
• Students will not have to pay anything until six months after they leave school.
• Students who enter careers in public service can get discounts on their loans or have them completely forgiven.
• Students who do work that is very low-paying may be able to have their debt written off after 25 years.
Drawbacks of Subsidized Stafford Loans
• The amount of the loan cannot go above certain strict annual limits.
• The amount a borrower can get depends on their grade level and the type of student they are.
• Loan fees are paid from the disbursements.
The 2013 Stafford Student Loan Interest Rate Hike
In early July 2013, congress failed to stop the interest rates on Stafford Loans from doubling to 6.8 percent, an increase that was said to affect seven million students. Up to the doubling of the interest rate there had been multiple attempts to come up with solutions to the trillion-dollar student debt problem, but no agreements. Congress was split, largely along party lines. In early August, a bipartisan agreement was reached whereby the interest rates for subsidized Stafford Loans were tied to the market and capped at 8.25 percent. Interest rates these days are relatively low, therefore students borrowing now will be repaying their loans with only 3.86 percent in interest; the interest rate at the time they borrow the money will remain fixed for the duration of the loan. This latest plan is retroactive and lowers the rate of loans taken out since the July increase. However, the fact that rates are low now does not mean that they will stay low. Some student loan experts have pointed out that interest rates will rise as the economy improves; this means that students in the future will likely have much higher rates. The present cap of 8.25 percent is considered to be relatively high and the Congressional Budget Office predicts interest rates of 7.25 percent by 2018.
The 2010 Student Loan Changes
Three years prior to this latest interest rate debacle, the government overhauled the student loan industry by taking student loans out of the hands of private banks, for the most part. From 2010 on, the government was to be the lender. The goal was to eliminate the middleman and streamline the student borrowing process, passing on any savings to the students.
It is true that this new legislation provides some certainty, both to students and to private lenders. It is now possible to look at where the market is headed and make plans accordingly. On the other hand, it almost certainly means that there will be big increases in the future.
In 2010, the government took over student loan programs. The private sector banks, reeling under the strain of the recession, cut back in their lending and asked students to pay despite lack of employment. Because many students could not find work and could not make payments, a serious default problem loomed on the horizon.
At the same time, many lawmakers felt the loan program amounted to more of a boon to the banks than to the students. The banks would lend students money at a higher interest rate than many lawmakers believed were fair. The government also guaranteed the student loans, so the banks experienced little risk.
What Loan Programs did the Government Take Over?
The Department of Education assumed control of most of the federal student loan programs. The Health Care and Education Reconciliation Act of 2010 placed Stafford, PLUS and Consolidation loans under the government student aid program. Pell Grants, designed to help poor students finance education, grew as a federal grant program in the same legislation. In effect, the government took over almost 95 percent of the student loans. Continue reading “Government Take Over of Student Loan Programs” »
Paying for post-secondary education is an expensive endeavor. Many students utilize a combination of personal funds, scholarships and academic loans to pay for annual tuition bills. One of the most popular forms of student loans is known as a Stafford Loan. These loans are funded by the federal government and dispensed through the Department of Education. Before considering this form of student loan, it is vitally important to understood who is eligible for receiving such funding.
Submitting the FAFSA
Students attending colleges and universities in the United States are encouraged to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA. This application examines the financial situation of the student and his or her family. Using the information submitted with the application, schools determine the student’s level of financial need. Not only is this a necessary step for obtaining a Stafford Loan, but the results of the FAFSA can also determine eligibility for additional assistance. Continue reading “Who Can Apply for a Stafford Loan” »