Stafford Student Loans

Robert Shireman, executive director of the Project on Student Debt, was interviewed regarding the best strategies for students to use in making financial-aid decisions. regarding higher education. We will be reviewing his comments and advice regarding the Stafford Student Loan and others.

Be sure to check out federal loans first as, not only do federal loans carry a fixed interest rate, but they are also extremely easy to apply for, offering flexible repayment terms, as well as a government subsidy for part of the interest.

As with other higher education loans, you will be able to deduct interest payments up to $2,500 per year if you are single.

The Perkins Loan is the number one government loan to aim for. It’s great for students – up to $4,000 a year and a fixed 5% rate. Plus the feds will be picking up the interest tab till the loan comes due. Student have a choice of deferring repayment for nine months after school or spread payments over 10 years.

And, there’s no need to shop for a lender to connect with a Perkins. Schools will distribute the dollars themselves. Of course, these days they are doling them out sparingly.

Also, the federal fund that supplies these loans is not being replenished to the full amount. Therefore, students lucky enough to be offered a Perkins Loan should waste no time accepting it quickly. Where the Stafford Loan Falls in Place of Loans

The Stafford Loan would be the next one you would want to consider. This loan carries a fixed rate of 6.8 percent,compared to the recent prime rate of 8.25 percent, and it is available to any student who applies for federal financial aid.

With this loan, students may borrow up to $3,500 a year as freshmen, $4,500 as sophomores, and $5,500 as juniors and seniors. Also, if your family qualifies for need-based aid, the federal government pays the interest on a Stafford Loan until it becomes due.

Interest starts to build on day one, otherwise. Students may defer repayment up to six months after graduations, or extend repayment from the standard 10 years to as much as 25 years, lowering the monthly amount due (but adding to the overall cost of the loan).

As long as you don’t duck out on paying your obligation all together, Uncle Sam makes for a lenient lender. Borrowers are able to ask for forbearance and postpone payments for up to a year at a time, as well as defer them if they end up returning to school.

Stafford Loans offer both unsubsidized and subsidized loans. What is most attractive about a Stafford Loan financial aid package is the fact you may be eligible for either one or a combination of both. The biggest difference between the two is when the interest begins to accrue.

The Plus Loan (Parent Loan for Undergraduate Students) also follows the Perkins and Stafford Loans from the government. After these, you would have to look into private loans, which will carry variable rates and probably tougher terms.

Needless to say, the government loans are by far the best option if you can obtain one. You also can combine a Stafford Loan with other available loans and they work with you in the enrollment, installment, and repayment areas.

Related Posts:

• A Guide to Student Loans
• Direct Student Loan
• Common Types Of Student Loans
• Types Of Private Student Loans