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According to the Department of Education, more than $100 billion in federal education loans and $10 billion in private student loans are awarded every year. Stafford Loans make up a big portion of that federal education loan amount. While subsidized Stafford Loans require a student to demonstrate financial need, unsubsidized Stafford Loans do not. In fact, even students from higher income families who believe they will not qualify for federal student aid may find that they qualify for a federal unsubsidized Stafford Loan.
Do you think you will qualify? If you’re a U.S. citizen, national, permanent resident or eligible non-citizen enrolling at least half time in a college or university that participates in the Federal Family Education Loan Program, it is likely that you will qualify for an unsubsidized federal Stafford Loan. This loan is an invaluable tool you can use to make financing your college education more convenient and affordable.
The first step to receiving your unsubsidized Stafford Loans award is to submit your Free Application for Federal Student Aid (FAFSA). Check with your school for their filing deadline as well as insight into the documentation and information you’ll need to complete the application. You can complete your FAFSA online at www.fafsa.ed.gov and receive your Student Aid Report (SAR) containing the all-important EFC (expected family contribution) number within a week of submission.
According to studentaid.ed.gov, the current interest rate on a federal unsubsidized Stafford Loan is 6.8 percent. Interest will begin accruing as soon as the loan is disbursed. You will be responsible for paying the interest accrued. These interest payments can be made monthly or you can choose to defer them until after you graduate. If you chose this option, the interest owed will be added into your loan total. If you need help figuring interest on unsubsidized Stafford Loans, consult your lender or your school’s financial aid advisor.
An unsubsidized federal Stafford Loan award may be between $5,500 and $20,500 each year, minus any subsidized amount awarded. Many students demonstrating some financial need receive a financial aid package that includes both subsidized and unsubsidized Stafford Loans. The maximum amount a student may be awarded each year is based on their grade level and whether or not they are considered independent for tax purposes.
As an undergraduate, you may not borrow more than $46,000 total in federal education loans including both subsidized and unsubsidized Stafford Loans. As a graduate student, you can only borrow up to $138,500 in loans, and this amount includes any loans disbursed while you were an undergraduate.
Six months after graduation from your undergraduate or graduate program (or otherwise ceasing to maintain half-time enrollment status), you will be required to begin making payments on your loans. Unsubsidized Stafford Loans, like their subsidized counterparts, offer several flexible repayment options. You can choose from the graduated repayment plan, the income based repayment plan and an extended repayment plan if your loans total more than $30,000. You can generally change your repayment plan at any time, and even request a deferment of payments if you encounter financial difficulty. This flexibility is perhaps the greatest benefit unsubsidized Stafford Loans have over other non-federal education loans available.
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