The National Directory of Certified Public Accountants

Ask A CPA - Mortgages & Loans

In The College Financial Aid Process , What Is A Stafford Loan ?

Federal Subsidized Stafford Loans are low interest loans for students who demonstrate financial need. While in school the interest is paid by the government. Repayment of interest and principal is deffered until 6 months after graduation or when the student leaves school. The repayment term is up to 10 years. As of the year 2000 undergraduates may borrow up to $3,500 for the 1st year, $4,500 the second year and up to $5,500 for each undergraduate year thereafter. Graduate and professional students can borrow up to $20,500 per year. In 2011 new Stafford loans interest rates are at 3.4%. Origination fees of up to 3% may apply. Federal Unsubsidized Stafford Loans are low interest loans for students not based on financial need. While in school you may choose to make interest payments or let the interest build up and pay it with the principal upon 6 months after graduation or leaving school. The repayment terms and maximum loan amounts and interest rates are the same as the Subsidized Stafford Loans.

If you need professional help with "Mortgages & Loans" or have other tax questions, we can help you find a local licensed CPA for a free, no-obligation consultation.