Stafford loans are federal student loans in the US that are based on financial need, not credit score. Repayment plans vary from 10 to 30 years, and options for temporary relief include forbearance and deferment. Loan forgiveness is possible for those in public service or with permanent disabilities.
For students in the United States seeking to pursue 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 a car loan or mortgage, however, federal Stafford loans are not made based on your credit score. Financial need alone determines whether you can receive federal Stafford loans and whether or not you are eligible to receive a subsidized, non-interest-bearing loan while you are still in school.
Stafford loans do not need to be repaid as long as you attend school at least part time. Once you graduate or stop enrolling part-time, you will have six months to find a job and get your affairs in order. During this time, you will receive a packet with the details of the lender and the due date of your first Stafford loan repayment.
The length of your Stafford loan repayment depends on the type of repayment plan you select, as well as the total amount of your loan. The standard plan places even monthly payments over a period of ten years, while the extended payment plan even extends the monthly payments over periods ranging from 12 to 30 years. Graduated repayment plans start with low monthly payments, then payments slowly increase over a 12- to 30-year repayment period. Income-sensitive repayment increases or decreases your loan payment amounts as your salary changes, and the loan takes 12 to 30 years to pay off in full.
If you’re having trouble meeting your Stafford loan payment obligations, there are a few different options to consider. For those who have several different loans to pay off, Federal Stafford loan consolidation can help by combining all debts into one lower interest rate loan. If you are temporarily unable to make payments due to illness or a medical emergency, your lender may allow you to apply for forbearance for a limited time. Loans can also be deferred for up to three years due to unemployment or economic hardship.
Getting your Stafford loan payment obligations permanently canceled is not easy. Your loan will not be forgiven because you didn’t like the program, you didn’t graduate, or you couldn’t find a job after you earned your degree. Stafford loans are generally made only to those who work in designated areas of public service, such as teaching at a school with a high percentage of low-income students. Loans can also be forgiven if you become permanently disabled. Discharge of Stafford loan repayment obligations after bankruptcy is only possible if you meet very specific eligibility criteria.
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