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Stafford loans:
Stafford loans are the most popular type of student loans and are federally-guaranteed loans that allow students to borrow funds from lenders.
Loan Types:
Stafford loans can be either subsidized or unsubsidized. Subsidized Stafford loans are need-based, and the government pays the interest that accrues while you are enrolled at the university. To obtain an unsubsidized Stafford loan, on the other hand, one does not need to be in financial need. However, interest is charged from the date that the loan is issued to the college.
The Federal Stafford and PLUS loan programs are collectively-known as the FederalFamily Education Loan Program (FFELP); they are funded by private lenders. The Federal Direct Student Loan Program (FDSLP) refers to loans that are issued directly to students through their colleges and guaranteed by the federal government.
Loan Terms :
Dependent |
Yearly loan limit |
Freshman |
$3,500 |
Sophomore |
$4,500 |
Junior or senior |
$5,500 |
Independent |
Yearly loan limit |
Freshman |
$7,500 |
Sophomore |
$8,500 |
Junior or senior |
$10,500 |
Graduate or professional |
$20,500 |
Loan Type |
Yearly Loan Limit |
Undergraduate dependent lifetime limit |
$23,000 |
Undergraduate independent lifetime limit |
$46,000 |
Graduate or professional lifetime limit* |
$138,500 |
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Eligibility :
To qualify for a Stafford loan, students must be enrolled at least half-time. The amount that they can borrow depends on their academic status and grade level. To apply for this loan, you must first fill out a Free Application for Federal Financial Aid (FAFSA).
Interest Rates:
Federal Stafford Loans disbursed beginning July 1, 2006, the interest rate is fixed at 6.8%.
Repayment :
With a Stafford loan, flexible repayment options are available:
- Standard repayment: This option has the lowest overall interest cost. You must pay both principal and interest payments monthly for up to the maximum 10-year repayment term.
- Graduated repayment: With the graduated option, you receive a higher overall loan cost than with Standard Repayment. This plan offers reduced payments in the beginning years of repayment and increased payments thereafter. The loan must be paid off within the maximum 10-year period.
- Income-sensitive repayment: With the income-sensitive option, you have a higher total loan cost than the standard option. Monthly payments are a percentage of your gross ncome. This plan makes you reapply every year and payments are adjusted yearly to reflect changes in income.
- Extended repayment: With the extended repayment plan, you have a higher total loan cost than with standard repayment. If you have a large amount of student loan debt, you may be eligible for a 25-year repayment term and the preference of graduated or standard payment plans to keep payments affordable.
- Student loan consolidation : With student loan consolidation, you can significantly reduce your monthly payments, but it will commonly result in a higher overall loan cost. You typically combine your current outstanding loans into a new loan with a single monthly payment and a fixed interest rate.
Perkins Loans:
The federal Perkins loan is another federal loan option very similar to the Stafford loan, but contains no upfront fee for taking out the loanas well as provides a longer grace period.
Loan Terms:
Depending on such factors as the college's funding level, the student's level of need, and the time that the loan application is submitted, a student can receive up to $4,000 per year of undergraduate enrollment. The college either pays you directly or credits your account.
Eligibility :
Students must be enrolled in at least half time and have an "exceptional" financial need to qualify for the Perkins loan. You mustbe a U.S. citizen, permanent resident, or have eligible non-citizen status. To apply, you must fill out and submit a Free Application for Federal Student Aid (FAFSA).
Interest Rates:
Perkins Loans offer a very low, set interest rate at 5%
Repayment :
A repayment term of up to 10 years is typical.
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