How much can you borrow?
Because Direct Stafford Loans are intended to be used for educational purposes only, the maximum loan amount for an academic year is determined by the expenses of your school, less any other financial assistance you may receive.
Your school will determine the type of loan you receive and the actual loan amount.
In addition, there are limits based on the year you are in and your status as a dependent or independent child. For example, a freshman student can borrow up to $5,500 per year, of which $3,500 is the maximum for “subsidized” loans if he is a dependent child. The maximum may be increased by $4,000 to $9,500 for independent students or dependent students whose parents do not qualify for Parents PLUS Loans However, the $3,500 limit in “subsidized” loans still applies.
The loan amounts increase for the following academic years. Check Details on how much you can borrow under these two loan types.
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However, remember that your goal is to borrow as little as possible so you can complete your studies with the least amount of debt. This is especially important for students who want to complete a law, medical, or business degree and then need to borrow money. You don’t want to add debt to the debt.
How do you get your credit?
The amount will be deposited directly into your school account and used towards tuition, fees, board and lodging, and other school fees. If there are extras, the school will send them to you so you can pay for other education costs.
Are there any advantages to Direct Stafford Loans?
Like other federal student loans, Stafford Loans have several advantages. Two of the most important are the Public Service Contracts (PSLF) and Support for Teacher Education for College and Higher Education (TEACH) funding programs.
Additionally, if borrowers are struggling to make their monthly payments on their federal student loans, they have the option to request a deferral or acquiescence (see below) or to have their monthly payment adjusted based on their income (see details).
Another benefit is that the government will pay interest on the ” subsidized “ loan when you are in college, in the grace period, or in deferral.
What are your repayment options?
Your repayment options vary depending on the type of loan.
Below are standard refund options:
- Standard Repayment Plan: This plan saves you the most money because it allows you to pay off your loan the fastest – within 10 years if you have unconsolidated loans and within 10-30 years if you have consolidated loans. However, because the fixed monthly payments are higher, this is not an option for borrowers seeking PSLF. Incidentally, this will be your default option if you don’t choose an amortization schedule.
- Tiered Repayment Plan: With this plan, you start with low monthly payments that increase every two years. You pay off your loan within 10 years if you have unconsolidated loans and within 10-30 years if you have consolidated loans. It’s generally not an option for those looking for PSLF.
- Extended Fixed Repayment Plan: If you need to lower monthly payments, this plan gives you the option to extend your payment period to 25 years. You have a fixed monthly payment. To qualify, your outstanding loan amounts must be greater than $30,000. This plan is not an option for those seeking PSLF.
- Extended Tiered Repayment Plan: This plan also gives you the option to extend your payment period to 25 years. However, your monthly payments will increase over time. To qualify, your outstanding loan amounts must be greater than $30,000. This plan is not an option for those seeking PSLF.