Stafford Student Loans – How Much do they Really Cost?

3.4% versus 6.8%. It Matters.

3.4% versus 6.8%. It Matters.

When going to college, financial aid can be a scary and intimidating process. With unfamiliar terms and long lengthy processes, applying for and accepting student loans can make the transition to college a bit complicated. Traditionally, there are two common forms of federal student loans that are made available to undergraduate students; subsidized and unsubsidized Stafford loans. The college determines the actual loan amount you are eligible to receive each academic year. However, there are limits on the maximum amount in subsidized and unsubsidized loans that you are eligible to receive each academic year and over your academic career.

Subsidized Stafford Loans

These student loans are based on financial need and do not rack up interest while students are attending a college or university at least half time. What this means is that the government will take on the task of paying any interest that is collected on your loan while you are in school or in deferment periods. Subsidized loans have various loan limits ranging from $3,500 to $5,500 a year and are federally guaranteed.

Unsubsidized Stafford Loans

As you can imagine an unsubsidized loan is opposite of a subsidized one. These loans are not based on financial need alone and do collect interest while you are in school or in a period of deferment. As with the subsidized loans, there are limits ranging from 2000 to $7,500 depending on the academic year.

If you are a dependent student whose parents are ineligible for a Direct PLUS Loan, you may be able to receive additional loan funds of an additional $4000 to $5000 per academic year.

In order to apply for any student loan, you must fill out a FAFSA every year that you are applying for federal financial aid. This form can be found online and should be completed once per year. It will be sent to all the schools of your choice simply by entering the school codes on the college selection section of the FAFSA form.

Whether you are headed to college in the fall for the first time or starting your senior year of high school, be sure to apply for federal financial aid early in January of each year.

For more resources and help, listen to the archive of College Smart Radio Tackling the Runaway Costs of College on June 15th, 2013.  Listen to this broadcast on YouTube here.

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