A Stafford loan is a loan provided to students who pass eligibility. Primary eligibility includes being enrolled in an accredited American higher education institution and the loan provided would assist in the financing of their education. This loan is provided by legislative enactment and is authored by Senator Robert T Stafford, hence the name Stafford loans. The loans are given out by the Unites States government to assist students regarding their tuition fees.
Students wishing to avail of a Stafford loan must first complete a FAFSA or the application form and they can apply for a loan either from the Federal Direct Student Loan Program or more popularly known as the Direct Loan. Another way that an individual student can get a loan is through the use of a commercial financial intermediary and tapping the funds from the Federal Family Education Loan Program or FFELP. During the term of the schooling, there are no payments expected on the Stafford loan as this the period called in-school deferment and continues on until six months after the student leaves school by either graduation or by dropping out from school. This is the grace period of the loan that allows the student to be able to find the financial means to pay for the loans.
One way to be able to manage Stafford loans is by Stafford consolidation. All loans of the individual student be it subsidized or unsubsidised, can be paid off and placed into one single loan. Stafford consolidation is quite particular since not all financial institutions accept such a financing scheme, as it is after all a federal loan. But by availing of a Stafford consolidation scheme, you can lower your over-all payment by at least a major percentage and be able to avoid the effect of inflation on your payments. This kind of consolidation also provides the individual borrower all the benefits of a standard loan consolidation program, like avoiding the stress of many loan payments and lowering over all interest rate of pre-existing debts into one rate.
But before one can be allowed to have Stafford consolidation, certain requirements need be met. First amongst this is that the loans to be included in the consolidation must not be in default. Also, the student should have graduated from studies or enrolled in units less than half of the required minimum number of hours in order to have the Stafford consolidation. By having existing Stafford loans consolidated, there is a significant reduction in the monthly amortization of the loans and the repayment period can be stretched out from ten to thirty years. This translates to savings not only for your own personal needs but also avoidance of stress and other related anxiety over loans.
As you can see, getting a Stafford consolidation scheme is one of the ways that an individual can properly manage the loans incurred as a student. This is one of the sure fire ways that an individual can become debt free and have a positive credit rating when one has existing Stafford loans to pay.