Federal Direct Stafford Loan

Federal Direct Stafford Loan

Stafford loans are fixed-rate loans for undergraduate and graduate students attending college at least half time. Provided under a federal government program, Stafford loans provide an excellent educational funding resource for US citizens and permanent residents. Because the program is controlled by the US federal government, interest rates can be very competitive – as low as 5.6% currently for undergraduates. Stafford loans can be subsidized or unsubsidized, based on the student’s financial need. Subsidized Stafford loans have a lower maximum limit than unsubsidized loans but the government pays the interest rate while the student is in school.A Stafford Loan is a student loan offered to eligible students enrolled in accredited American institutions of higher education to help finance their education. The terms of the loans are described in Title IV of the Higher Education Act of 1965 (with subsequent amendments), which guarantees repayment to the lender if a student defaults.In 1988, Congress renamed the Federal Guaranteed Student Loan program the Robert T. Stafford Student Loan program, in honor of U.S. Senator Robert Stafford, a Republican from Vermont, for his work on higher education.Because the loans are guaranteed by the full faith of the US government, they are offered at a lower interest rate than the borrower would otherwise be able to get for a private loan. On the other hand, there are strict eligibility requirements and borrowing limits on Stafford Loans.Students applying for a Stafford Loan or other federal financial aid must first complete a FAFSA. Stafford Loans are available to students directly from the United States Department of Education through the Federal Direct Student Loan Program (FDSLP, also known as Direct).No principal payments are expected on the loan while the student is in school enrolled at least half-time, referred to as in-school deferment. Deferment of repayment continues for six months after the student leaves school by graduating, dropping below half-time enrollment, or withdrawing, referred to as the grace period.Stafford Loans are available both as subsidized and unsubsidized loans. Subsidized loans are offered to students based on demonstrated financial need. (See Expected Family Contribution.) The interest on subsidized loans is paid by the federal government while the student is in school and during authorized deferment. For unsubsidized Stafford Loans, students are responsible for all of the interest that accrues while the student is enrolled in school. The interest may be deferred throughout enrollment. Unpaid interest that is deferred until after graduation is capitalized.The Budget Control Act of 2011 eliminated subsidized Stafford loans for graduate and professional students effective July 1, 2012.Unsubsidized Stafford loans are still available to these students.

Direct Subsidized Loans:-Direct Subsidized loans have more favorable terms to help students with financial need, including:
   -Direct Subsidized Loans are available to undergraduate students who have financial need.
   -The student’s school determines the amount they can borrow, and that amount cannot exceed the student’s financial need.
   -The U.S. Department of Education pays the interest on a Direct Subsidized Loan:
        -while you are in school at least half-time;
        -for the first six months after you leave school (known as a grace period); and
        -during a period of deferment (a postponement of loan payments).

Direct Unsubsidized Loans:-Direct Unsubsidized Loans are available to both undergraduate and graduate students, including:
    -There is no requirement to demonstrate financial need.
    -The student’s school determines the amount the student can borrow based on the student’s cost of attendance and other      financial aid he or she receives.
    -The student is responsible for paying interest on a Direct Unsubsidized Loan during all periods.
    -If the student decides not to pay the interest while he or she is in school and during grace periods and deferment or      forbearance periods, his or her interest will accumulate and be added to the principal amount of your loan.

Eligibility for Direct Stafford Loans:-In order to receive either a Direct Subsidized Loan or Direct Unsubsidized Loan, you will need to be enrolled at least half-time in a school that participates in the Direct Loan Program. Generally speaking, you must also be enrolled in a program that will lead to a degree or certificate awarded by the school. You school will determine the type of loan(s), if any, and the loan amount you are eligible to receive each academic year.There are limits on the amount in both subsidized and unsubsidized loans that you are eligible to receive each academic year (annual loan limits) and the total amounts that you are allowed to borrow for undergraduate and graduate study (aggregate loan limits). The loan amount you are eligible to receive each academic year may be less than the annual loan limit. These limits vary depending on:
    -What year you are in school
    -Whether you are a dependent or independent student

Applying for a Stafford Loan:-To apply for a Stafford Loan, you first must complete the Free Application for Federal Student Aid (FAFSA) or Renewal FAFSA. After the FAFSA is processed, your school will review the results and you will receive an “Award Letter” informing you about your loan eligibility. You may then apply for the Federal Stafford loan.

Repaying the Stafford Loan:-You will have a six month grace period after you graduate, leave school, or drop below half-time enrollment before you are required to begin repayment on your loan. You will receive repayment information from your loan servicer during this period, and you’ll be notified of your first payment due date. Payments are generally due monthly.

How to Apply:-Step 1 of 3: Complete the FAFSA
Step 2 of 3: Complete Entrance Counseling and the Master Promissory Note Once signed in, select “Complete Counseling” then select “Start” under the “Entrance Counseling” header and follow the instructions by selecting the counseling specific to the borrower’s degree classification (undergraduate or graduate student) at the bottom of the page Once counseling is completed, select “Complete MPN” from the menu on the left side of the page. Select “Subsidized/Unsubsidized” and follow instructions
Step 3 of 3:Accept the loans you wish to borrow via AccessPlus

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