On December 23, Robert T. Stafford died in Rutland, VT, at 93. Stafford represented his state in the U.S. Senate for 17 years. Despite his passing, his effect on student loan funding will remain considerable for years to come. Because Stafford was a strong advocate of educational opportunity, in 1988, Congress named the main federal guaranteed student loan program after Stafford. His namesake loan has financially assisted millions of college students pursuing their dreams of higher education. The senator’s legacy will be perpetuated by the existence of Federal Stafford Loans.
Federal Stafford Loans assist the majority of federal loan borrowers. The first component to understanding Stafford Loans is noting the differences between the subsidized and unsubsidized versions of the loans.
For a student to be awarded a subsidized Stafford Loan, he or she must demonstrate financial need. Once granted, a subsidized Stafford Loan is beneficial because the government pays the interest on it while the student is attending school. Also, there is a six-month “grace period” provided to the student after graduation, during which he or she does not have to make payments. When the grace period expires, repayment begins.
When a student takes out an unsubsidized Stafford Loan, there are significant differences. The borrower is responsible for the interest accruing while in school, although actual repayment is deferred until after graduation.
The interest accumulates and is added to the loan balance. Unsubsidized Stafford Loans are available to all students, regardless of level of need. It is not uncommon for an eligible student to combine both subsidized and unsubsidized loans to take advantage of as much funding as possible.
Stafford Loans may be granted by Federal Family Education Loan Program (FFELP) providers or by Federal Direct Student Loan Program (FDSLP) providers. FFELP loans are provided by private lenders, including banks and loan associations. FDSLP loans are provided directly by the government to students and administered by Direct Lending schools.
Interest rates are subject to change annually on July 1. For Stafford Loans that were disbursed before July 1, 2006, the fixed interest rate stands at 6.8%. Loan lenders offer the same interest rate. Additionally, lenders may offer interest rate reductions if borrowers consolidate their loans with them, set up auto-debit accounts, or make consistent on-time payments.
There are fees associated with taking out a Stafford Loan, but they’re small considering the opportunities that investing in education affords. To apply for a Stafford Loan, a student must complete and submit a Free Application for Federal Student Aid (FAFSA). This is the procedure for both unsubsidized and subsidized Stafford Loans. The application determines financial need for a subsidized loan and is necessary for the processing of both types of loans.
Article Title : Former Senator Passes, Leaves Legacy
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Education is one of the most basic right of any human, but with the increase in prices and the costs involved in education this has made these rights turn into a privilege which very few can enjoy. Any normal person today in the whole of United States has to take an education loan at one point of time to pay for their education fees.