The Stafford Loan Program Application Process and Repayment Options
If you’re starting to apply for college, you may be looking at student loans. You’re not alone, studies have shown that over 94 percent of students borrow from loans to make it through college. This article will go over more pointers and tips for applying for the Stafford Loan Program Application. We will also talk about repayment options.
Applying for Stafford Loan Program Application
When you start to apply for your Stafford Loans, you will need things to help you do it correctly.
1. FAFSA. The main thing you’ll use when you apply for your loans is the FAFSA or Federal Application for Student Aid. The FAFSA is how you will apply for the Stafford Loan Program. The website has a lot of information like a college cost sheet and critical deadlines. You can use these to estimate how much you’ll need to borrow. You can also double check that you’re within the deadline period. Before you start filling out this form, you will need some information from your parents or guardians. You will need:
- Documents that Prove Their Combined Yearly Income (Tax Papers, Pay Stubs)
- Current Addresses (Utility Bills)
- Current Phone Numbers
- First, Middle, and Last Names (Driver’s License, Identification Card, or Birth Certificate)
- School Code
- Social Security Cards
As soon as you have all of this information, you can start the FAFSA. The screen will go step by step with helpful tips. When you finish it, give it a once over to make sure everything is correct. Finally, hit submit and wait for your acceptance letter.
This letter will list the loan amounts by semester. It will also have your school costs, along with your loan amounts. You can deny any loan you want, or you can accept them all. As soon as you send this letter back, they will send the loans to your school. It will apply them to your tuition and send you any left over money. This money will be deposited twice a year into your bank account. You’re supposed to use this money for any additional college costs. This also includes books, lab fees, or additional courses.
The Repayment Process
Once you either graduate or fall below part time status, your grace period starts. This is six months when you won’t have to make any payments on your loans. If you’ve been paying interest all along, you continue to pay it. If you have trouble repaying your loan, there are options available. You have ten years to repay the Stafford Loan Program. However, you can lengthen this up to 25 years with special circumstances.
Stafford Loan Program Application and Repayment Process
- Extended Repayment Plan. You have to have more than $30,000 in debt to be eligible for this plan. Also, you are allowed to have either fixed payments or graduated payments. You can pay your loans back over a 25-year span.
- Graduated Repayment Plan. This payment plan starts off with lower payments, and they get larger every two years. This is also a ten-year repayment plan. The payment amount goes off of your monthly income.
- Income Driven Repayment Plans. Your monthly payment is 10 to 15 percent of your monthly income. You will have to submit proof of your income each year. This will determine if your payment stays the same or goes up or down. The lender will forgive any remaining balance after 20 to 25 years of payments.
- Income Sensitive Repayment Plans. The lender will look at your monthly income to calculate your monthly payment amount. You will have to recertify this each year to stay on this plan. You can pay your loans back over a 15-year span.
- Pay as You Earn Repayment Plan. This plan allows you to repay your loans up to 20 or 25 years. Your lender takes your monthly income and calculates 10 percent. So, this total will be your payment amount. You will have to recertify this annually to keep the same payment amount. The lender will forgive any remaining balance after 25 years of on time payments.
- Standard Repayment Plan. You can opt for the standard repayment plan, and this is the most popular option. The payments will remain the same throughout the repayment process. You’ll pay your loans back over a ten-year stretch.
Deferment or Forbearance
If you are having trouble paying your loans back, you can apply for deferment or forbearance. You will have to prove that your financial circumstances have changed each year. There is no set amount of times you can apply for these options. There are two types of forbearance options. The first is a general forbearance. So, this option is entirely up to your loan lender whether or not they grant the request. The second one is a mandatory forbearance. They will grant this forbearance if you meet the eligibility requirements. Lastly, you must recertify these each year.
Cancellation, Discharge, or Forgiveness of the Stafford Loan
The final option you have available is either cancellation, discharge, or forgiveness of your loans. Several careers offer loan discharge after you’ve worked in your field for a set number of years. Also, if you’re a military personnel and you become an active duty, you could be eligible as well. If you believe you qualify for one of these options, contact your loan lender. They will be able to check quickly and see if you’re eligible or not.
This article has gone over how to apply for Stafford Loans. We also covered several repayment plan options. We touched on loan deferment and forbearance as well. Finally, we talked about loan cancellation, discharge, and forgiveness. The Stafford Loan program is known for being one easiest loan to qualify for forgiveness. This fact is what makes the Stafford Loan program application so popular. If you’ve read this and you’re still not sure, contact your loan lender. They can help you and discuss your student loan options further in depth.
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