The federal Stafford loans are the most famous kind of student loan
. This loan is the loan awarded by the federal government. In fact, there are 2 types of Stafford loans. These are subsidized and unsubsidized.
- A Subsidized Stafford Loan - A need-based subsidized loan is a good option for a student in college. In case a student applies for this type of loan, the federal government will cover the loan interest payments when he/she is entered full time in school. When the student stops attending full time or graduates, he/she has a 6-month grace period till the federal government ceases to cover the interest. Receiving a subsidized student loan typcally takes the following steps:
1. The student qualifies and applies for a loan totaling, for instance, $1,350 per semester.
2. A bank gives the check to this student and mails to the college. The college distributes the funds.
3. The federal government starts paying the interest of bank instead of the student.
4. A year later the student completes his/her education.
5. 6 months later a bill and the subsidized loan balance principal as well as a yearly interest price comes in the mailbox.
A Subsidized Stafford loan is granted to students that is based on need. And the need is defined by the income of the student's parents in case the student is regarded as a dependent and by the student's income in case he/she is regarded as independent.
2. An Unsubsidized Stafford Loan - This loan works like the other version, but the student is answerable for all the amassed interest. It looks like an auto loan. The major principal is divided into a payment schedule, every month a little of interest as well as a little of principal is due to the lender. The difference from a bank loan is the student is able to defer payment till after graduation or stopping to study part time.