Stafford loans allow students to borrow money to pay for tuition at colleges, universities, technical schools and trade schools. Stafford loans are federal loans made available to students desiring post-secondary education.
Subsidized Stafford loans consider financial need. No interest accumulates on subsidized Stafford loans until repayment begins. Students may obtain unsubsidized Stafford loans regardless of financial need; however, interest accumulates on these loans as soon as the government disburses the loan.
Your school determines loan limits, but in general, no student can borrow more than $57,500 while in undergraduate school or $138,500 total with undergraduate and graduate school combined as of 2010. Students in medical fields may be able to qualify for increased loan limits up to $224,000.
Students should talk with a financial aid counselor to determine appropriate financial aid. Often, students may be eligible for grants or scholarships that do not require repayment. Students who borrow the maximum amount of Stafford loans may be shocked when their first payment of $700 to $800 comes due.
Stafford loans offer low interest rates and flexible repayment plans. Students who cannot make their payments should request help from their loan company. Ignoring student loan payments can lead to serious consequences such as wage garnishment and tax refund seizure.