David Flores from Greenpath Debt Solutions provides the following information. Learn more in the video interview with Fox 2's Murray Feldman.
What is the Stafford loan program?
Stafford Loans are federal student loans made available to college and university students to supplement personal and family resources, scholarships, grants, and work-study. Nearly all students are eligible to receive Stafford loans regardless of credit. Stafford loans may be subsidized by the U.S. Government or unsubsidized, depending on the student's need.
Stafford Loan Information
How will this doubling of the interest rate affect students?
According to U.S. Department of Education estimates, students participating in the Stafford Loan Program can expect to pay an additional $2,600 on a regular 10-year period loan. This balances out to an additional $24-27 per month for students to pay after graduating. Of course, the payments vary on how much you borrow.
Does this affect all outstanding student loans?
No. This new interest rate only affects new Stafford loans originating after July 1, 2013.
Interest will start to accrue immediately after graduation, during the traditional six-month grace period.
Six-month grace period for payments after graduating is still in effect. HOWEVER, for loans acquired from July 2012 forward, the interest now starts accumulating during the six-month grace period (could mean up to $120 in interest accumulated during the grace period.)
Alternatives to the Stafford?
-Perkins Loans: Needs based program so not all students will quality. 5% interest rate. Credit history does not matter.
-Parent PLUS – 7.9% interest rate. These loans are taken out by the parents of the student to help pay for the cost of education. The parent is responsible for paying back the loan. Credit History matters.
-Work-study Programs: This program provides part-time jobs for students with financial need which allows them to earn money to help pay for education expenses.
-Scholarships: Look to see what scholarships may be offered by the college/university and determine if you may be eligible.
-Private Student Loans: Interest varies depending on lender.
-Borrowing from Friends or Family to help pay for school.
Talk to your college financial aid office.
For other mattes concerning loans, debt and managing money go to: http://www.greenpath.org/