Stafford LoansFor individuals that are interested in beginning or continuing their education but don�t have the funding, there are many options, but Stafford Loans provide a great solution.� They are the most common type of low-cost education loan that is provided by the United States government, and they can be used to improve qualified students’ education at colleges, universities, or trade schools.

Currently the Stafford Loan offers two different options for students to choose from.�� The first of which is an unsubsidized loan.� This version is not based on FAFSA financial need, so it is accessible to more individuals.� Also, students will be responsible for no payments while in school but will be held responsible for the interest that accrues on the loan during the time they are in school.

The other option is a subsidized loan. With this loan, the government pays the interest on the loan while the student�s in school, during the grace period, or approved for deferment.� Unlike the unsubsidized loan, this version is based on financial need as dictated by FAFSA.

Interest Rates
Interest rates for subsidized Stafford Loans are currently at 6% for undergraduate loans and 6.8% for graduate students.� On the other hand, unsubsidized loans for both undergrad and grad students is at 6.8%.

Eligibility

Students that are interested in the loan must be enrolled in a school as either a part-time or full-time undergraduate, graduate, or professional student.� They must also be a citizen or legal resident of the United States, and have no unresolved defaults on federal student loans.

Disbursement
After filling out the FAFSA form and being approved, the loan will be given out in 2 separate payments.� The first part will not be greater than half the amount of the loan and must be used for tuition, fees, room and board.� Then if money is left over, the school will send the student the remaining balance.

Amounts
Now many students may wonder how much money they can get for an academic year.� The maximum an undergraduate student may get from a subsidized loan annually ranges between $3,500 and $5,500, with a lifetime limit of $31,000.� For graduates the amount per year is $8,500 and a lifetime limit of $65,500.� As for an unsubsidized loan, undergrads annual limits are $4,000 and $7,000 depending on if the student�s status is independent or dependent, with a lifetime limit of $23,000.� Graduates can borrow $12,000 per year and a total of $138,500.

Repayment
Unfortunately with these loans comes the repayment.� Once students graduate or drop below half-time, there’s a six month grace period in which students will not be required to make payments.� However, after the grace period ends, students must start repaying their loan, but there are a number of different repayment options.� Depending on the amount the student took out, repayment is $50 per month at a minimum.

Deferment
If students find themselves in a situation where they are unable to make their monthly payment, then they might be eligible for loan deferment.� This temporary period will allow loan repayments to be reduced or suspended, and interest won�t accrue on the loan. However, the interest payment is still required.

Default
Now students that cannot pay the loan back on time may default.� This is a serious circumstance that can affect your credit rating.� Not only are you responsible for the loan and interest, but you might also be liable for additional fees.� Actions that may affect you include losing eligibility for future student loans or financial aid, tax refunds being withheld, employers withholding part of an individual�s salary, or legal actions.� Even after all of this, the loan must still be repaid.

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