According to the Student Loan Network, the Federal Stafford Loan is one of the many types of federal student loans designed to provide financial aid for both students in colleges and universities.
If you are a single mother hoping to resume your education in spite of financial constraints, the Federal Stafford loan may just be the answer to your financial concerns.
Eligibility
In order to apply for a Federal Stafford loan, you must submit proof of your U.S. citizenship or permanent residency in the United States. Non-citizens are also considered eligible if they are enrolled in one of the schools that take part in the Federal Family Education Loan (FFEL) Program1.
Other requirements are as follows:
- Submission of FAFSA or Free Application for Federal Student Aid
- Demonstrate financial need if you are applying for a subsidized loan
- You must not be in default on any education loan or owe a refund on an education grant
How to Apply
Applying for the Federal Stafford loan is easy. It is the period of waiting that follows which can get difficult. Upon completing and submitting your FAFSA, you will then have to wait for the school to evaluate your application.
If you’re eligible, you will shortly after receive an award letter. Instructions will be provided with your award letter regarding the next steps in the process.
Amount Available
With the Federal Stafford loan, you can borrow up to $5,5002 every year (if you’re a first year student) but the amount will mostly depend on your financial need, the number of years you still have to be in school, and the degree you are pursuing to complete.
Interest Rate
The Stafford loans can either be subsidized or unsubsidized. When your loan is subsidized, the government will take care of paying your interest expenses for as long as you meet the specified requirements for your loan, which include at least half-time enrollment and meeting the financial need conditions listed by your school.
For unsubsidized loan, you are responsible for all of the interest that accrues while you are still in school. The interest may be deferred throughout enrollment and added to the loan principal upon graduation.
Update: The Budget Control Act of 2011, eliminates subsidized Stafford loans for graduate and professional students effective July 1, 2012. Unsubsidized Stafford loans will still be available to these students.
The lowest possible interest rate is 3.4% for subsidized undergraduate loans. (The interest rate is expected to return to 6.8% in 2012-133 ) Those that are unsubsidized, on the other hand, are charged 6.8%. The important thing to remember here is that all interest rates are fixed for the duration of your loan.
Aside from the interest, do keep in mind that you need to pay an origination fee based a percentage of the amount of loan you receive.4
References:
- The FFEL Program is sometimes referred to as the federally-guaranteed student loan program. [↩]
- studentaid.ed.gov [↩]
- Source: Direct Stafford Loan [↩]
- For loans first disbursed on or after July 1, 2010, the loan origination fee is 1.0% which will be deducted proportionately from the loan disbursement. [↩]
