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What are the Terms and Conditions of Stafford Loans

While there are numerous options when it comes to federal loans for higher education, Stafford loans are typically one of the more popular. Today, some $60 billion is spent from the federal government in helping people pursue college. Regardless of the curriculum, the first step is to start by completing a loan application. These applications are completely free online or through the college.

As far as what are the terms and conditions of Stafford loans, it all starts with the application. Keep in mind that people interests in going to college would have to meet certain criteria. For instance, the individual has to be a citizen of the US or a non-citizen who is eligible with a GED or high school diploma, and the person would have to show proof that financial aid is needed.

First, what are the terms and conditions of Stafford loans, remember that loans are given based on the need as deemed by the government. The only exception would be an unsubsidized Stafford loan. With various pieces of information such as income, the application would be reviewed and then a final decision made. One of the primary benefits of a Stafford loan is that the interest tacked onto the loan is very low. Additionally, this type of loan is guaranteed by the federal government, is offered to both undergraduate and graduate students, and they are a very affordable option.

What are the terms and conditions of Stafford loans? Most importantly, these are easy to get and affordable. A Stafford loan comes from a program known as the Federal Direct Loan Program or FDSLP, which is under the US Department of Education. Additionally, anyone interested in a Stafford loan also needs to know that the loan would have to be in their name only. The good news is that with this particular loan, you would not be subjected to a credit check. Therefore, the terms and conditions of a Stafford loan are such that even students with less than perfect credit can apply and be approved.

Another huge benefit associated with a Stafford loan is that once you have graduated from college, you would not be required to start making payments right away. Instead, you would be provided with a six-month grace period. Then, if necessary, your unpaid loan balances could be consolidated into a single loan during that period. With this, you have adequate time to get on your feet and then worry about making your loan payments.

Remember, the terms and conditions of Stafford loans starts with you having the necessary documentation for the application process. This means having a current Social Security card and GED or high school diploma, as well as already be attending or having been accepted by a college. Now, with a Stafford loan, if you had ever defaulted on any other type of federal student loan, then you would not qualify. Additional reasons why you would not be able to secure a Stafford loan would include being convicted of any drug-related crime or having too much debt already wrapped up in other student loans.

As mentioned, the terms and conditions of a Stafford loan are broken down into subsidized and unsubsidized options.

•   Subsidized – In this case, the money is given out based on the financial need of the student. Typically, two thirds of money coming from a subsidized Stafford loan is to students who have a family gross income of $50,000 or less. Interest in this situation begins at 6%.
•   Unsubsidized – Stafford loans in this category are awarded no matter the student’s need although each student is required to complete an FASFA for eligibility.

Other aspects for the terms and conditions of Stafford loans is that after a person graduates from college or during the time when he or she is only enrolled for about 50% of the time, there is a six-month grace period for repayment. Finally, Stafford loans do have limitations, as outlined below:

•   Undergraduate students have a $4,000 annual limit with cumulative limits of $20,000
•   Graduate students have a $6,000 annual limit with $40,000 of cumulative limits
•   Dependent Annual Loan has limits such as:
o   Freshman - $3,500 subsidized and $2,000 unsubsidized
o   Sophomore - $4,500 subsidized and $2,000 unsubsidized
o   Junior and Senior - $7,500 subsidized and $2,000 unsubsidized
•   Independent Annual Loan has limits to include:
o   Freshman - $3,500 subsidized and $6,000 unsubsidized
o   Sophomore - $4,500 subsidized and $6,000 unsubsidized
o   Junior and Senior - $8,500 subsidized and $12,000 unsubsidized
o   Professional or Graduate - $8,500 subsidized and $12,000 unsubsidized
o   Lifetime Limits - $31,000 total although up to $23,000 of that amount can be subsidized.
o   Undergraduate - $57,500

When it comes to the terms and conditions of Stafford loans, keep in mind that college counselors are available to assist in any way and to answer questions that might arise. Students interested in subsidized or unsubsidized Stafford loans commonly need some degree of guidance. Therefore, to ensure the right loan and amount of the loan are applied for, you should never hesitate to work with the school’s financial aid staff.

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