Questions and benefits of federal loans:
- They have lower interest rates than most kinds of consumer loans.
- They have flexible repayment options to help all borrowers more
easily afford their monthly payments.
- Repayment is delayed until after you leave school, and offers a
grace period of up to six months.
- No credit check is required.
- Interest may be tax deductible, up to a certain level of income.
- Unsubsidized loans do not require you to demonstrate financial
need—therefore most students are eligible for a Stafford loan.
- Options for postponing repayment of your loan are available for
certain circumstances—always stay in contact with your lender if the need arises for this option.
Federal Stafford loans are either subsidized or unsubsidized.
The federal government pays the interest that accrues on the
subsidized loans while you are enrolled at east half time in
school, during your grace period and during your approved
deferment. With unsubsidized loans, you are responsible for
paying all the interest that accrues on that loan. You can elect
to pay that interest while you attend school or have it accrue
until you enter repayment when it will be added to the original
amount that you borrowed.
A student must demonstrate financial need to be eligible for a
subsidized loan. All students regardless of need are eligible for
the unsubsidized Stafford loan ( with few exceptions).
There are maximum limits to how much a student can borrow
in one academic year in the federal Stafford loan program.
You can borrow up to a total of $20,500 with a maximum of
$8,500 of which can be subsidized. The academic year begins
in fall and ends in summer. There is a cumulative aggregate
limit of $138,500 which includes all undergraduate borrowing
and graduate borrowing. As an example, if you borrowed a
total of $46,000 in undergraduate Stafford loans, then your
graduate maximum would be $92,500 for a total maximum