For graduate school students seeking to finance their education, a Graduate Stafford Loan can be an advantageous loan because of its low interest and easy obtainability.
College tuition for undergraduate studies has risen astronomically in the last decade, and graduate school tuition has also risen, albeit not at the same pace. The vast majority of graduate students will leave school having had to borrow funds to pay for the cost of their education. Finding low-interest loans with easy repayment terms is imperative for students who need to borrow, but want a secure financial future not drug down by a millstone of debt once they graduate.
What are Stafford Loans?
Graduate Stafford Loans can help. Stafford Loans are federally backed, low-interest loans (currently set at a fixed rate of 6.8 percent) available to qualifying students. The interest rates on these loans are among some of the lowest available, but the eligibility requirements for obtaining a Stafford Loan are strict.
Eligibility
To be eligible for a Graduate Stafford Loan, the student must fill out the FASFA (an application for federal student aid), the student must have financial need, as defined by the student’s school, the student must be a U.S. citizen or eligible non-resident, the student must be enrolled at least half-time and the student must attend a school that participates in the Federal Family Education Loan Program.
While the student is in school, he or she will not have to make payments on the loan, as it will be in in-school deferment. During this time, however, the student’s Stafford Loans may or may not accrue interest, depending on what type of Stafford Loan the student has obtained.
Types of Stafford Loans
In general, there are two types of Graduate Stafford Loans.
Subsidized Graduate Stafford Loans are loans in which the interest does not begin to accrue until the student leaves school and the loan enters into repayment, typically after a six month grace period following the student’s graduation. While the student is in school, interest on the money borrowed is paid by the federal government.
Unsubsidized Graduate Stafford Loans are loans in which interest begins to accrue at the time of disbursement. This means that while the student may not have to make payments while he or she is in school, interest on the money borrowed to finance the student’s education is being calculated, and will have to be paid once the student begins repayment.
When borrowing money under the Stafford Loan program, a portion of the funds you borrow may come in subsidized loans, while another portion may consist of unsubsidized loans.
Some more recent Stafford Loans may carry a one percent origination fee.
Limits
When borrowing via the Graduate Stafford Loan program, you’ll only be able to borrow the estimated cost of attendance for your institution minus any other financial aid you receive. Other factors influencing the amount you’re able to borrow include your student status and how many years you have been in school. Students whose parents are not expected to contribute to their education, or independent students as they are called, are likely to be able to borrow more than dependent students.
In general, students can borrow up to a maximum of $20,500 per year in Graduate Stafford Loans. The maximum students may borrow under the program is $138,000, including any Stafford Loans they may have borrowed for undergraduate studies. These maximums may be lower for some students, depending on their status. Only $8,500 per year and $65,000 total in Stafford Loans may come from unsubsidized loans.
Students’ whose needs exceed the amount they are allowed to borrow under the Stafford Loan program may be able to borrow funds from other federal or private lenders.
Repayment
Once the student graduates, after about six months the loan will enter into repayment. Students have a variety of options, including standard repayment, extended repayment and repayment schedules based on income in order to make repayment less financially burdensome. To further ease repayment, if the student has multiple Stafford or other federal loans, he or she may be able to consolidate them to lower monthly payments on the loans.
Because of their low interest rates and convenience, Stafford Loans are among the most popular student loans. More than 5 million college students take out Stafford Loans each year, including many graduate students. To find out whether you are eligible for a Graduate Stafford Loan, fill out the FASFA and talk to your school’s financial aid office.