Stafford loans are a common form of financial aid for US students, obtained by completing a FAFSA. They are not based on credit score and do not need to be repaid while in school. Repayment options include consolidation, forbearance, and deferment, but loan forgiveness is only available in specific circumstances.
For students in the United States who are looking to get a post-secondary education, Stafford loans are a common form of financial aid. These federal student loans can be obtained by completing a Free Application for Federal Student Aid (FAFSA). Unlike an auto loan or mortgage, however, federal Stafford loans are not made based on credit score. Financial needs alone determine whether you can receive federal Stafford loans and whether or not you are eligible for a non-interest-bearing soft loan while you are still in school.
Stafford loans don’t have to be repaid as long as you are in school at least half-time. Once you graduate or drop below half-time enrollment, you’ll have six months to find a job and get your affairs in order. During this time, you will receive a packet with details of the lender and the due date of your first Stafford Loan repayment.
The repayment duration of the Stafford loan depends on the type of payment plan selected and the total loan amount. The standard plan also has monthly payments over a ten-year period, while the extended payment plan also extends monthly payments over periods ranging from 12 to 30 years. Graduated repayment plans start with low monthly payments, then payments slowly increase over the 12 to 30 year repayment period. Income-sensitive repayment increases or decreases loan payment amounts as salary changes, with full loan repayments taking 12 to 30 years.
If you’re having trouble meeting your Stafford loan repayment obligations, there are a few different options to consider. For those who have several loans to repay, federal Stafford loan consolidation may be able to help by combining all of the debt into one loan with a lower interest rate. If you are temporarily unable to make payments due to illness or a medical emergency, your lender may allow you to request forbearance for a limited time. Loans can also be deferred for up to three years due to unemployment or economic hardship.
Getting permanent repayment of your Stafford loan repayment obligations isn’t easy. Your loan will not be forgiven because you didn’t like the program, didn’t graduate, or couldn’t find a job after getting your degree. Stafford loans are generally only given to those who work in designated public service areas such as teaching in a school with a high proportion of low-income students. Loans can also be forgiven in the event of permanent disability. Canceling your Stafford loan repayment obligations after bankruptcy is only possible if you meet very specific eligibility criteria.
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