The federal government offers a variety of student loans to help students pay for college. These loans are offered as Stafford Loans and Parent Plus loans. The loans can help you cover gaps in the savings you have. If you cannot borrow enough to pay for college with the federal loans then you can turn to private loans as an alternative resource. Be careful that you do not borrow too much so you are not overwhelmed by student loan debt when you graduate.
1. Subsidized Stafford Loans
A subsidized Stafford loan is a loan issued by the federal government to the student. The government pays the interest rate while you are in school, which is why the loan is subsidized. The government will issue you the loan each semester you are in school. The money can help you pay for tuition, books, and living costs each year. Payment on these loans does not begin until after graduation. There is generally a six month deferment after graduation to allow the student time to find a job. However, you should make sure your loan is processed correctly so you do not have any late payments on the loan. These loans have changed, and are now being called Direct Federal Loans.
2. Unsubsidized Stafford Loans
An unsubsidized Stafford loan is a loan through the federal government that is issued to the student, but the government does not pay the interest while you are in college. Many students choose to pay the interest while in school to prevent the interest from compounding. These loans follow the same basic rules for repayment as subsidized student loans.
3. Applying for Stafford Loans
The loan application is the same application you would use for the Pell Grant. There is not an income limit to qualify for these loans, and you do not need to have good credit qualify for this type of loan. However, you do need to show adequate yearly progress and finish each semester of school in order to qualify the next year for school. If you are under the age of twenty-four and single you will need to report your parents information on the application as well.
4. Paying Back Stafford Loans
Student loan companies are willing to work with you on repaying the loans and may defer payments for a short time if you cannot make payments. Student loans are very rarely forgiven in a bankruptcy, and you must pay them off unless you become permanently disabled or you die. You should contact your creditor if you cannot make payments, since they are willing to work with you to receive payments.
