Stafford Loan

Stafford loans are the type of loans where the interest loan is considered to be the lowest among the students loan. Moreover, the borrower is allowed to postpone the payment until 6 months have passed by after the graduation and also this type of loan doesn't require the credit check. So, even if the borrower has got a bad credit or no credit at all, depending upon his earning capacity, a student loan can be granted to him.

Types of Stafford loans:

A Stafford loan can be bifurcated into two different sub loans:

1) Subsidized loan: A Stafford loan that is subsidized means, here the government pays for the interest part till the graduation of the borrower. That mean, nothing is added in the principal amount of the loan as interest till the graduation is done by the student. These loans are given only on the basis of the financial needs and thus a little hard to get. Since the interest benefit is given to this kind of loan program, the amount that is given under it is also less as compared to the unsubsidized loans. Here the loan amount is limited to $3500 in case of a borrower dependent upon his parents.

2) Unsubsidized loan: An unsubsidized Stafford loan is almost the same like the subsidized loan but with an extra burden on the borrower that the loan will carry interest at the time when the borrower is still in the school, i.e. till he finishes his graduation. The interest amount is not paid by the government in this case and the repayment begins after the completion of the graduation.

Borrowing limits of a Stafford loan:

The Stafford loan is basically based on two factors which decide the eligibility criteria for the loan. It depends upon whether the borrower is a dependent upon the parents or not and secondly, what is his year in the school. Based on these two factors, the loan amount is decided. Moreover, there is a lifetime limit over the Stafford loans up to which the loan amount can be borrowed. Currently it is capped at $138500 per student. The different slabs for the Stafford loans amount limits are;

1) For freshman: $3500 for a dependent and $7500 for an independent student.

2) For a sophomore: $4500 for a dependent student and $8500 for an independent student.

3) For junior or later: $5500 for a dependent and $10500 for an independent student.

4) For a graduate or professional degree holder: $20500 irrespective of being dependent or independent upon the parents.

Stafford loan has provided a good option for the students to complete their studies with the minimal tension of repayments and interest accruals, besides, it also gives them the experience of the inside story of a debt world.