Is Stafford Loan a PELL Grant?
College is expensive, but a combination of scholarships, grants, and federal loans can make a college education more affordable. Don’t forget to fill out the Free Application for Federal Student Aid (FAFSA) and apply for all of your other available financial resources.
Subsidized Stafford Loans are awarded to undergraduate students who demonstrate financial need. The government pays the interest on your loan while you are in school, during a six month grace period following graduation, and during periods of deferment or forbearance.
Subsidized Stafford Loans
A pell grant is a grant you can receive to help pay for college. This type of grant can be offered by your school, a local agency, or even the federal government. The amount, interest rate, period when interest accumulates, and repayment can vary depending on your situation.
Subsidized Stafford Loans (sometimes called Direct Loans) are offered to undergrads who demonstrate financial need. The federal government will pay the interest on your loan while you are in school at least half-time, during a grace period following graduation, or during authorized deferment periods. You can also use subsidized loans to cover costs if you have to leave school or stop attending for other reasons, such as an economic hardship.
The interest on subsidized Stafford Loans is low because the federal government subsidizes it. There are also options for loan forgiveness, including Public Service Loan Forgiveness and Teacher Loan Forgiveness, which are available after 20 to 25 years of payments.
Unsubsidized Stafford Loans, on the other hand, are offered to students who do not demonstrate financial need. The interest on unsubsidized loans begins to accrue at the time of disbursement. In addition, there are more loan limits and higher annual and aggregate limits for unsubsidized Stafford Loans than for subsidized loans.
These loans can be taken out by both undergraduates and graduate students. They have no minimum credit score requirement and no cosigners are needed to apply for these loans.
The origination fee for a subsidized Stafford loan is 1.066% for loans that are disbursed on or before October 1, 2018 and a 1.062% fee for those disbursed after that date and before Oct. 1, 2019.
You can repay your subsidized Stafford Loans in a variety of ways, including with fixed, graduated, or extended payments. You can also choose an income-driven repayment plan, which reduces your monthly payment based on your income and family size.
Repayment on a subsidized Stafford Loan typically takes longer than repayment on an unsubsidized loan. You can also choose an income-driven deferment plan, which allows you to postpone your loan repayment as long as you work in a qualifying profession.
A subsidized Stafford Loan can be a great way to finance your education because it has lower interest rates than other student loans. It also includes features such as a six-month grace period, which means that your first payments will be smaller than on other student loans.
Borrowers can consolidate their Stafford Loans into a Direct Consolidation Loan, which will restructure their existing debt into a new loan with a single interest rate and a single servicer. However, this will result in a loss of borrower benefits like deferment or forbearance, so it’s best to weigh the pros and cons before deciding.
You can also refinance your subsidized Stafford Loans into a private loan, which will reduce your interest rate and may increase your debt-to-income ratio. But if you have good credit, this option can be a smart move to free up cash for other expenses.