Stafford Loan Benefits
When financing your education, a Stafford loan should be your first choice once you have already collected scholarships and grants. Stafford loans are fixed rate federal student loans that are guaranteed by the government. They can be used to pay for tuition, housing, books and more. Stafford loans have a number of great benefits all designed to help make paying for college more affordable.
Fixed Interest Rate
One of the most important Stafford loan benefits is the fixed interest rate. Subsidized undergraduate Stafford loans have a fixed rate of 3.4%, while their unsubsidized counterparts have a fixed rate of 6.8%. The interest rate will remain fixed for the life of the loan until repayment is complete. Additional benefits include:
- No credit check
- No payments until after graduation
- Increased borrowing limits - up to $20,500 per year depending on degree status and years in school
Affordable Repayment Plans
Stafford loan repayment plans are designed to provide flexibility for any budget. Once you complete school and enter repayment, you will have the option to pick from a number of helpful plans:
- Standard Repayment - A fixed amount each month based on your principle and interest.
- Graduated Repayment - Lower payments at the beginning of repayment then, over time, payments increase.
- Income Based Repayment - Monthly payments are based on yearly income and loan amount.
- Extended Repayment - For loans totaling more than $30,000, this plan offers a choice of fixed or graduated payments over a period of up to 25 years.
Deferment and Forbearance
One key set of Stafford loan benefits that shouldn’t be overlooked are the Deferment and Forbearance options. You should always aim to make your monthly scheduled payments - but the unexpected usually happens – so having the option to postpone payments is helpful.
Additional Stafford Loan Benefits
- Eligible for federal loan consolidation
- Interest is tax deductible