Fast Federal Stafford Loans – a Helping Hand for Students

Stafford Subsidized Loan is a long-term federally sponsored loan that is allocated to students who have financial need. The government pays interest on Stafford Subsidized Loans as long as the student takes at least half-time classes. The loans are available in two variations – Federal Family Education Loan Program loans and Federal Direct Student Loan Program.

In order to obtain a Stafford subsidized loan a student must be able to prove their financial need. If they fail to do that, they are still entitled for an unsubsidized Stafford loan which presupposes that a borrower pays the interest themselves, but the payments can be deferred until the student graduates (the deferment will result in the increased sum of the loan).

There are certain limits in terms of the amounts of Stafford loans, with the latest limits imposed in July, 2007. I know many students who choose to combine subsidized and unsubsidized loans in order to get as much cash as possible.

Stafford loans come with a fixed rate of 6.8% that doesn't vary from lender to lender. However, since July, 2008 the interest rate for subsidized Stafford loans obtained by undergraduate students will be reduced to 4%. Repayment of Stafford loans starts 6 months after the borrower's graduation or falling below half-time studies. As a rule, the repayment period is 10 years, but there is an option of consolidating federal Stafford loans that allows for alternative repayment terms.

Federal Stafford Loan Consolidation Credit

Consolidating federal Stafford Loans is possible in terms of a fixed-rate refinancing program which transforms all your Stafford loans into one new loan. The option offers certain benefits and is pretty popular among students. One of the major reasons of its popularity are savings that can be obtained due to consolidation. In fact, by consolidating your federal Stafford loans you may be able to reduce your current monthly payments up to 53%. There are special Stafford Loan consolidation calculators that can help you get a fair idea of your potential savings.

Other advantages of consolidating your federal Stafford loans are as follows:

• you can get lower interest rate
• improve your credit score
• choose a repayment plan suitable for your current financial situation
• make one loan payment a month
• do without credit checks and application fees.

So, what do you need to qualify for Stafford loans consolidation? First, the minimum amount of your loans must be $20,000. Second, your loan payments must have been made on time. Finally, you must be a graduate or enrolled into studies less than half time.