The Stafford Loan Explained
Are you starting college within the next year? If you are, you are probably frantically looking for ways to pay for it. You should be applying to every college scholarship you can find, working as many hours at your part time job as you can to save up some cash, and talking to your parents about any possible college fund they have and if there is any money they can give you towards college. College costs have only gone up in recent years, much faster than the cost of almost everything else.
Some people are very fortunate when it comes to paying for college. A lucky few are born into a family with wealth and have their college education easily paid for. Others are extremely smart and get full ride scholarships to the first college they choose.
For the rest of us, we have to come up with the money on our own. Even after attending a community college or going to a state school, getting all the scholarships we can, and saving up all the money we can, some of us will still come up short. Those who do have to take out loans.
For some people, ‘loan’ sounds like a dirty word, but in fact, even a mortgage is a loan, and most people will have to take out a mortgage if they ever want to buy a house. If you want a college education, taking out some loans as a last resort will not kill you. If used correctly, it will give you a huge career boost and help you later in life.
Government student loans are the first place you should look. They will always have the lowest interest rate compared to private loans, and especially compared to credit cards. The Stafford Loan should always be your first choice.
The Stafford loan is an affordable loan that can be used for college tuition at a two or four year college, university, or trade school. You can borrow up to $4,000 a year to a maximum of $20,000 total. There are two different types of Stafford loans, the subsidized loan and the unsubsidized loan.
The subsidized loan is created for those in extreme financial need. The government will pay the interest for you during your attendance in college and for until six months after you graduate. You have to qualify for financial need to get this loan.
The Stafford loan is the first place you should look if you are considering a loan. You will have to pay it back, so make you have have plans to repay when you graduate.