Stafford Loans - Need to Know
The majority of people who want to get a college education need to get financial aid in order to be able to pay for that education. Most students (and their parents) simply don't have the cash that's necessary to pay the high cost of college out of pocket. As a result, they turn towards any scholarship, loan or other money that they can get their hands on. As a general rule, they try to get the best college loans possible in order to have the least amount of money owed back after they graduate from college. For this reason, a large percentage of college students are familiar with Stafford loans.
Stafford loans are one type of government loan designed specifically to provide students with the money needed for college. Because of this purpose, you must be enrolled in college in order to receive a Stafford loan. You also must meet certain other requirements before you'll get approval for these college loans. The benefit is worth the hassle because Stafford loans have better interest rates and repayment terms than any private college loans.
Stafford loans are preferred as tuition assistance over private loans because of the benefits they offer specifically to students. In addition to the lower interest rate, Stafford loans do not require immediate pay back. If you were to use a credit card to fund your education, you would have to start making payments immediately. With a Stafford loan, your payments are deferred (without penalty) until six months after you graduate. This makes Stafford loans much easier on students, particularly those who aren't able to work while going to school.
In addition to deferred payments, your interest may be deferred. This means no interest accrues on the Stafford loan while you're in school. This is only true for one type of Stafford loan, called the subsidized Stafford loan. Should you get an unsubsidized Stafford loan, you may be able to defer the interest payments but the interest itself will accrue while you are in school. Whether you get a subsidized or unsubsidized school loan will depend on your financial aid status.
In order to apply for a Stafford loan, a student must first complete the FAFSA, which determines your level of financial aid. This will determine how much money you are eligible to receive and whether that tuition loan will be subsidized. You can then apply for the loan through either the Department of Education or through a private lender of your choice. The benefit of choosing a private lender is that you can compare the different terms and benefits that they offer; in some cases, this may mean getting a lower interest rate than the one being offered by the government. Stafford loans aren't the only financial aid that you're likely to get but it's a good place to start when looking to fund your college education.