Stafford Loans 101

May people are starting to see college as an investment that is growing increasingly difficult to afford.  If you have looked into financial aid, you may have heard of Stafford loans.

Stafford loans are federal loans given to college and university students for school.  Interest rates are generally low, and the borrower does not have to pay it back while they are still a full-time student, or for six months afterward (whether that changes when you graduate or when you drop below half-time student status).  They are not based on your credit score, and your limit can be raised the longer you are in school.

Stafford loans come in two types: subsidized and unsubsidized.  Any student can qualify for the unsubsidized types, because these are not based on credit.  Right now the interest rate is at 3.86%, which begins to accumulate as soon as the loan is issued but does not have to be paid until you are done with school.

On the other hand, there are subsidized Stafford loans.  The interest rates are lower than those that are unsubsidized, and furthermore, no interest accumulates while you are in school or during the following grace period.  This is because the government pays the interest during that time.  Subsidized Stafford loans are also different from their unsubsidized counterparts because you can generally receive more each year with the subsidized loans, unless you are an independent student.

Are you thinking about getting a Subsidized Stafford Loan?  For your loan to be subsidized, you have to have some financial need as defined by your school.  Does the Unsubsidized sound almost as appealing?  Are you wondering how to apply?

If you are a college student or will be soon, you probably already have.  When you fill out your FAFSA for federal financial aid each year, this is also your application for Stafford Loans.

Once you graduate, after a grace period of six months, the loans do need to be paid back, but there are some payment options.  The loans can be consolidated to a lower interest rate than what you started with (if the current rate is lower than what you started with) so that you only have to worry about the one federal loan payment.  Depending on your occupation following graduation, you may even qualify for Stafford Loan forgiveness.

For more information on Stafford Loans, you can go to this site.

Kari Johnson

Kari Johnson is a first-year student at the University of North Carolina at Chapel Hill, having lived in North Carolina her whole life. At UNC, she is a declared Religious Studies major, and intends to study some form of writing as well during her time and Chapel Hill. She plans to graduate in 2014, after participating in undergraduate research and a study abroad program.

Kari discovered the magic of writing early, in elementary school, and has devoted every spare moment to it since. She writes fiction for her own amusement, and recently began writing articles for The Daily Tar Heel in Chapel Hill. Besides writing, she loves spending time with friends and family, reading, and drinking coffee. She defines herself based on her faith in God, her family roots, and her dream of one day publishing a best-selling novel.

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