Stafford Student Loans

Students can go to college through the federal student loans that can help them pay until they graduate. There are many different types of such loans. The Stafford student loans are just one of them. This article will attempt to discuss the basics of this type of loan in order to give information on how it helps the students of this country.

A Stafford Loan is a loan that is offered to students who are enrolled in accredited colleges, universities, and institutions. The Congress established this in 1965 in order to extend financial aid to students who are in need to supplement their resources. As part of the Federal Family Education Loan Program FFELP, the Stafford loans expanded to cover 90% of $50 billion plus funding.

Almost everyone is eligible to get this loan. Back when it was signed in Congress, the definition for the recipients was not very clear and so the program rapidly expanded. There are two types, the subsidized and the unsubsidized.

For the subsidized, the Federal government pays for the interest charges of the loan during the entire period when the student is in school until the grace period of six months after he graduates. There are certain qualifications for the subsidized loan and one of these is the family income. The government uses an Expected Family Contribution (EFC) number to determine if a subsidized loan will be granted or not.

Two out of three of this type of loan is granted to students who have parents with a total gross income of less than $50,000 annually. About 25 percent is extended to families with gross income of more than $50,000 but not more than $100,000. 10 percent is given to those with income that exceeds $100,000.

The other type of Stafford loan is the unsubsidized. The interest charges for this loan accumulate until the loan is paid off fully. The loan can be borrowed from a bank or a credit union, or directly from the Department of Education. Interest rates change year after year but these rates are still very low compared to private loans being offered in the market. For the academic year 2008 to 2009, the unsubsidized rate is 6.8% while the subsidized rate is 6%.

For a student to be granted with the Stafford loan, he must be enrolled at least in a half-time period. To apply, he must accomplish and submit the FAFSA (Free Application for Federal Student Aid) form. This loan is only given to US citizens or nationals, permanent residents, or eligible non-citizens. The student must also be enrolled in the accredited schools listed in the Federal Family Education Loan Program.

The family income and financial need will determine if the applicant will be given subsidized or unsubsidized loans. The loan is payable in 25 to 30 years depending on what kind of Stafford student loans have been granted. There are also a lot of repayment options that the applicant can choose from.

To learn even more about student loans visit http://www.studystudentloans.com where you will find more information about Stafford student loans.