Student Loans
There are a number of different types of student loans available to US students so it is important to understand the difference and what each type of student loan is for and how to apply.
The first is called a Stafford Loan which is essentially a government guaranteed loan for students offering low interest rates and deferred payment options. Within the Stafford Loans there are two types;
Government Subsidized and Government Unsubsidized. With a subsidized Stafford loan, the government pays interest on the loan until you graduate from college. To qualify you must demonstrate financial need.
With an unsubsidized Stafford Loan you still get the same low interest rate as the subsidized version, but you have to pay the interest on the loan from the date of origination. The other student loan type is
called a PLUS Loan - click on the link for a more detailed descrition.
To be eligible for the Stafford Loans you must satisfy these criteria:
- You must be a US citizen or eligible non-citizen
- You must have a high school diploma or GED certification
- You may not be in default on any other student loans
- You should be enrolled at least half time in an accredited degree program
If you satisfy the above criteria for a Stafford student loan then you need to do the following:
First, fill out the FAFSA (Free Application for Federal Student Aid) form which you can find at fafsa.gov.au and receive your financial aid award package,
which will outline what types of education funding you are eligible for, including Stafford loans. If you are eligible, then return to the
Financial Aid
site and apply for your Stafford loan by filling out the quick and simple online loans application.
Once your information is submitted and processed by Financial Aid, an application will be mailed to you in the post.
At this stage you simply sign, date and return in the enclosed envelope and you're all done!
There is no credit check necessary when applying for a Stafford loan.
What is the interest rate on a Stafford loan?
Stafford loan interest rates are variable and are adjusted every July 1st
(based on the 91-day Treasury Bill + 1.7% while you're in school, grace or deferment and + 2.3% during repayment).
Stafford interest rates are capped and will not exceed 8.25%
Who offers Stafford loans?
Each education institution selects a federal loan program - either the Federal Family Education Loan Program (FFELP) or the Federal Direct Loan Program (FDLP).
Both the FFELP and the FDLP offer Stafford loans. With FFELP, private lenders provide the loan funds. With FDLP, the government provides the loan funds.
View A Table Of Staffod Loan Borrowing Limits
What are the payment terms for a student Stafford loan?
In addition to their low interest rates, one of the best things about both types of Stafford loans is that your student loan payments may be deferred until six months after graduation.
You typically have 10 years to pay off your Stafford loan and the opportunity to save additional money by consolidating your Stafford loans when you graduate.
There are no prepayment penalties on a Stafford loan.
Is it ever possible to postpone repayment of a student Stafford loan?
Yes. Under certain circumstances, students can receive deferment or forbearance benefits for their loan.
If eligible, students may be able to postpone or reduce their monthly payments.
How are Stafford loans disbursed?
Typically, Stafford loan disbursements are sent directly to your school's financial aid office and distributed in scheduled payments during the academic term.
Once the student's registration is confirmed, depending on the school, the funds will be deposited into the student's bank
account or the student will be asked to pick up a check from the school's financial aid office.
Are there any charges for a Stafford loan?
There is a combined fee of up to 4% of the loan, comprised of a 3% origination fee that goes to the federal government and a 1% guarantee fee that goes toward the guaranty agency that insures your student loans.
These fees are deducted proportionately from each loan disbursement so that you aren't required to come up with any up-front money to obtain the loan.
Why Choose Financial Aid?
Apply online for a Stafford Loan Today!
