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These days, most college students end up taking out some form of loan to pay for their tuition, fees and other costs associated with a college degree program. While your non-federal student aid loan options may include home equity loans, personal loans and educational loans through your bank or credit union, a federal subsidized Stafford Loan, is preferable for many reasons. These reasons include the loan interest rate, subsidized interest payments, deferred loan payments and flexible repayment plans that are a part of every Stafford subsidized loan package.
Sounds great, right? Its is! And if you’re wondering how to get a subsidized Stafford Loan, the answer is simple. All you need to do to be considered for a Stafford subsidized loan award is submit your FAFSA application before the deadline determined by your school of choice. The Free Application for Federal Student Aid is used by the Department of Education and your college or university’s financial aid department to determine which federal financial aid programs you qualify for as well as the amount of your aid award.
To qualify for subsidized Stafford Loans, you must demonstrate financial need. Many of the questions on the FAFSA application pertain to your year income and assets. If you are still considered a dependent of your parents for tax purposes, you will provide their income and asset information as well. The Department of Education uses this financial information to calculate your EFC number, or Expected Family Contribution number. This number correlates to the amount they expect you and your family to be able to contribute to paying education costs. The lower the EFC number, the greater the federal student aid award package you are likely to receive.
Students must also be U.S. citizens, nationals, permanent residents or eligible non-citizens to receive a Stafford subsidized loan. In addition, they cannot be in default on any other educational loans or owe any grant refunds if they are to qualify.
If adequate need is demonstrated, the other requirements met, and a subsidized Stafford Loan is awarded, you must be enrolled in college at least half-time to receive your award. Half-time credit requirements are determined by individual schools, so check with your college’s admissions or financial aid advisors to ensure you’ve enrolled for enough credits.
You do not have to begin making subsidized Stafford Loan payments until after you graduate. There is generally a six-month grace period between your graduation date and the beginning of your required payments. According to studentaid.ed.gov, the current interest rate on subsidized Stafford Loans is 4.5 percent for undergraduates and 6.8 percent for graduate students. The government will pay the interest on your Stafford Loans while you are in school and during the grace period, so the total amount you owe will not grow.
When you do begin making payments on your loan, you can choose from several options. These include the graduated repayment plan, the income based repayment plan and an extended repayment plan if your loans total more than $30,000. The standard repayment term is ten years. However, should you become unemployed or suffer financial hardship after graduation, you can request a deferment of payment from your lender until you’re back on your feet. These deferments will extend the payment term of your loans.
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