When we talk about direct Stafford loan, we mean that kind of loan that can be accessed only by university and college undergraduate, graduate, as well as those professional students that are in college, even if it is part-time. The direct Stafford loans also bear the name, direct loans. These loans are given by the William D. Ford Federal Direct Loan Program.

We all know that schooling is expensive, and that’s why these loans are giving to students to help augment whatever resources that they have set aside for their higher education costs. This loan can be collected even when you have work-study, grants, and scholarships.

Direct Stafford Student Loan
Direct Stafford Student Loan

You Must Know About Direct Stafford Loan

Students utilize the direct Stafford loan in paying for their education such as room, books, tuition, as well as other education-related expenses that a student may incur.

Federal student loans were once referred to as Stafford loans when they were given by a program organized by the Federal Family Education Loan Program. After July 1, 2010, every federal student loan ever given out emanated from the United States Department of Education under the William D. Ford Federal Direct Loan Program.

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When we talk about direct loans and Stafford loans, we mean the same thing.

Usually, the direct Stafford loans come in two types, either the subsidized one or the unsubsidized loans. As for the subsidized loans, the government has made a pledge to pay a part of the interest for a particular period of time. This type of loan is only meant for those undergraduates that have shown that they are in dire need of finance. As for the others, they have to deal with unsubsidized loans.

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Before you can access the direct Stafford loan, you must have gotten admission into a university or college that has been ranked eligible by the body in charge. If you fit these criteria, you can fill the FAFSA- Free Application for Federal Student Aid before you apply for the loans.

The interest rates that you will be expected to pay on the Stafford loans taken out by you will be far lower compared to private loans. You don’t have to pay until you are done with school or you drop beneath half time.

How To Know If You Are Eligible For The Direct Stafford Loan

  1. Before you apply for the Direct Stafford Loan, you are expected to have met the following:
  2. You must be a United States citizen or a permanent resident.
  3. You must be in an institution of higher learning that has been accredited, and at least half time.
  4. You mustn’t be owing to any other student loan.
  5. You should have great academic standing. You should show that you possess a financial need if you are going for the subsidized loan.

What Are the Interest Rates Of The Direct Stafford Loan?

How much one pays as the interest rate for the Direct Stafford Loans change based on if you are going for a subsidized loan or an unsubsidized one.

As for the direct unsubsidized student loans, you are expected to pay an interest rate of about 4.45%, if you are an undergraduate. If you are a graduate, you are expected to pay an interest rate of six percent for those student loans that were collected before the seventh month of 2018 and after the seventh month of 2017.

As for the direct subsidized student loans, you are expected to pay an interest rate of about 4.45% on the Stafford loans that were gotten before the seventh month of 2018 and after the seventh month of 2017.

is There Any Case Where Direct Stafford Loans Is Free?

Currently, there is no type of Direct Stafford Loans that do not have to be paid back. You need to pay back what you were given, with interests on top. The only type of Stafford Loans that you are not expected to pay back with interest for a certain period is the unsubsidized loans.

The kind of loan that you collected determines when the repayment period starts.

As for the subsidized Stafford loans, the government tries to foot the interest as you remain in school. They also pay the interest rate for grace periods after you must have graduated and those deferment periods that you may face.

As for the Unsubsidized Stafford Loans, you are expected to pay whatever interest rate that accumulated from when you received the first installment of the loan to when you paid the entire loan and interest.

Is There A Limit To How Much That Can Be Borrowed With a Direct Stafford Loan?

Yes, there is a limit. The amount that a person eligible for an unsubsidized loan will get is different from the amount that one that is eligible for a subsidized loan will get.

The entire amount of money given to you is dependent on what school you are attending, and you are not allowed to have access to any amount that is more than what your financial needs are. All these affect how much you can get in the loan.

How much you are given yearly is also dependent on what level you currently are in close or university, as well as your current dependency status.

Usually, those freshmen that are eligible for subsidized loans are given $3,500 annually. As for the sophomores, they get $4,500 annually. The juniors get $5,500 annually, while the seniors get $5,500 annually.

What Are The Differences Between Unsubsidized and Subsidized Loans

There is the main disparity between both types of Direct Stafford loans, and it is who is responsible for the interest rates.

For those that fall under the subsidized loans, the government ends up paying their interest rates for some time, while they remain in school. The government also pays the interest rate for the grace period of six months after the person has graduated. The government takes it up a notch by paying the interest rates during a deferment period.

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For you to benefit from this type of loan, you must show that your financial needs are worse compared to others.

For the unsubsidized loans, you are expected to pay the interest rates, even as you go to school. You have the option of paying it while in school, or you can decide to allow the interest rates to accumulate over time, then you start paying them after school. It doesn’t matter if you are given grace period or deferment period, you will be expected to pay the interest rates of those periods. They will be added to how much you are expected to pay.

One great benefit of the unsubsidized loan is the fact that you don’t have to show to anyone that you are in a state of dire financial need. As long as you are an American and attend a university or college accredited, you can apply for it.

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