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Federal Stafford Loan
The most commonly awarded student loan is the Federal Stafford Loan. This
loan program has a fixed interest rate. There are two different kinds of
Federal Stafford loans - subsidized and unsubsidized. The Subsidized Federal Stafford loan is awarded to students who can prove
financial need. The subsidized version is a loan in which the Federal Government
reimburses the lender for the interest while you are in school. Therefore,
you do not need to begin making payments on these loans until after you
graduate, fall below half-time student status, or drop out of school entirely.
Repayment of the loan begins at the end of the six-month grace period and
is set up for a maximum of ten years with a minimum payment of $50.00 per
month. The actual amount you pay per month varies depending upon the total
amount you borrow. There is no penalty for pre-paying your loan. The need
analysis determines the amount you can borrow. However, there are loan
maximums which also determine the total amount you can borrow. See current interest rates, loan limits, and fees.
The Federal Subsidized Stafford loan is issued in multiple increments,
paid once each semester or quarter. The loan funds will be sent directly
to the school by the lender.
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