Financial Planning Options

Many students rely on loans from the federal government to finance their educations. These Stafford Student Loans, administered by “Direct Lending Schools,” are provided by the U.S. government directly to students and their parents. They have low interest rates relative to private/commercial student loan rates. Federal subsidized and unsubsidized loans do not require credit checks or collateral. Federal parent loans require credit check, but no collateral.

Federal student loans also provide a variety of payment plans, deferment options and extended repayment terms for those who qualify. Students eligible for the Stafford DL program loans are not allowed to borrow in any amount that exceeds the annual or aggregate loan limits, or their estimated cost of school attendance.

All Stafford loans are either subsidized (the federal government pays the interest while you’re in school and during the six-month grace period beginning after you graduate, leave school or drop below half-time enrollment) or unsubsidized (you pay all the interest while your are enrolled and during the six-month grace period, although you can have the interest deferred until after your grace period beginning when you graduate, leave school, or drop below half-time enrollment). To receive a subsidized Stafford loan, you must be able to demonstrate financial need.

All students who have not exceeded the annual or aggregate loan limits, cost of attendance and meet eligibility requirements for Title IV assistance are eligible for the unsubsidized Stafford loan regardless of financial need.

If you do not qualify for a subsidized loan, with the unsubsidized Stafford loan you have the option to defer payments until after you graduate, leave school or drop below half-time enrollment by capitalizing the interest. This, however, adds the deferred interest payments to the loan balance, increasing the overall size and cost of the loan.