Stafford Loan Benefits
Stafford loans are legally recognized resources which could go a long way in helping you out financially for all expenses involved in procuring an education in the United States of America. Furthermore, this should be your primary choice for financial resources for an education if the student has secured scholarships, grants or some other recognition from his institution. Additionally, the Stafford federal student loans can be utilized for the purpose of funding extra tuitions, books, housing and other daily expenses involved for the student.
There are several benefits that come in with the package of a Stafford Loan which makes it the best choice for a financial supplement along with the secured resources accessible to the individual. The key benefit of a Stafford loan is that it comes at a fixed interest rate, which in the case of subsidized loan comes to just 4.5 %, while in the scenario of an unsubsidized loan it just runs to around 6.8 % per annum. This interest rate will remain the same until the loan has been completely paid. Moreover the agency providing Stafford Loan will not bother you with any credit checks and apart from that the most appealing feature is that you are not required to make any payment for the loan until you have successfully completed your course and secured a job. In recent times, the borrowing limit of Stafford Loan has been substantially increased by the government, up to $20,500 for a year depending on the status of the education degree and the duration of the course.
The avenues for repayment of a Stafford loan are formulated keeping in perspective flexibility and the convenience of the borrower. The repayment phase of this loan will commence once you have successfully completed your degree. For repayment options, you have the liberty to choose from various supportive plans, which are outlined as follows:
- Standard Repayment Method:
This plan goes along the norms of regular loan repayment plans in which you are required to pay a fixed sum of money every month according to the amount borrowed and the annual rate of interest.
- Graduated Repayment Method:
According to this plan your monthly payment amount will increase at a constant rate through a specific interval of time.
- Income Based Repayment Method:
In this method, monthly payment amount is calculated on the basis of your annual income and the money borrowed.
- Extended Repayment Method:
This payment method offers a choice to the borrower having borrowed a loan amount that exceeds $30,000 to pay the same as per the standard or graduate repayment method over a duration of 25 years.
The Stafford Loans comes with another benefit that should not be overlooked. It gives the facility of Deferment of the loan payment under some valid circumstances. Although you should always aim to make your payments on time to avoid any additional charges, there are unexpected circumstances that could put you in a situation in which you would not be able to pay up at times. In such a scenario, you can postpone your payment until you are able to pay.
With the Stafford Loan in hand, an individual becomes eligible for federal loan consolidation with his other loans, thus making him accessible to more financial benefits. Apart from all this, the interest amount paid for the repayment of the loan allows you to claim a rebate from you income tax.