Subsidized Stafford Loans

By now you know that when it comes to paying for college you have plenty of options; whether you’re a first time student or you’re coming back for another round, somewhere out there is money just begging to be used by you.

And while it may come in a form that has to be paid back later (e.g., Stafford Loans), it’s better than selling a kidney to get through a year of schooling. But what is a subsidized Stafford Loan and what are the terms?

Is a Stafford Loan the same as a Direct Loan, Ford Loan or a FFEL? When you’re talking to counselors or loan officers, you may hear the terms Direct Loan and FFEL. These are terms used to describe where your Stafford Loan comes from, but it won’t affect you.

What is a subsidized Stafford Loan? A subsidized Stafford Loan defers payments and interest until you are finished with college—until you receive your Bachelor’s degree, discontinue your studies or no longer meet the enrollment criteria (at least part-time). Basically, you make no payments and accrue no interest until after graduation.

Who can qualify for these loans? Stafford loans are available to students enrolled in college at an accredited institution, are attending at least part-time and have filed the FAFSA. You must also have some financial need based on the results of your FAFSA.

How much money can I borrow? Subsidized loans are based on the difference between your college costs and your EFC, or Expected Family Contribution—this number will be determined on your FAFSA. But these loans do have limits…check this year’s limit at http://www.finaid.org/loans/studentloan.phtml.

What is the interest rate on a subsidized Stafford Loan? The interest rate for subsidized loans can never go higher than 8.25% but changes yearly.

How long do I have to pay back a subsidized Stafford Loan? The average repayment term for these loans is ten years, although you may have the opportunity to renegotiate these terms with your lender.

Do I have to pay interest while I’m still in school? Subsidized loans do not accrue interest until after you graduate from college, so not only do you not have to pay it while still in school, you won’t even be charged interest until after you’ve graduated.

When does repayment begin on my loan? Repayment on your student loan begins six months after you graduate from college, or six months after you stop attending college part-time or at all.

Do I have to have good credit to get a Stafford Loan? When you apply for a Stafford Loan, the lender most likely will not check your credit, since it is not required.

How do I get a subsidized Stafford Loan? First, you need to file the FAFSA and obtain your EFC. Then you can file an application for a Stafford Loan. Your campus financial aid office should have all the necessary paperwork.
Stafford loans are an incredibly important part of every financial aid package and will be offered to every student who is qualified and applies. Although these monies must be repaid, you can sleep easy at night knowing you’ll have a great interest rate and time to find a job before you have to start repaying the money.