Home»
Federal Student Loans for Bad Credit from CollegeSpot.com
Federal Stafford Loans
Stafford Loans are federal student loans made to college and university students to supplement personal and family resources, college scholarships, college grants, and work-study. They may be subsidized by the U.S. Government or may be unsubsidized depending on the student’s financial need.
Both subsidized and unsubsidized Stafford Loans are guaranteed by the Department of Education either directly or through guarantee agencies. Nearly all students are eligible to receive Federal Stafford Loans regardless of a bad credit score or other financial issues. Both types offer a grace period of six months, which means that no payments are due until six months after graduation or three months after the borrower becomes a less-than-full-time student without graduating. Both types have a fairly modest annual limit. The limit for the academic year beginning in 2007 is $3,500 per year for freshman undergraduate students, $4,500 for sophomore undergraduates, and $5,500 per year for junior and senior undergraduates.
Stafford Loan Borrowing Limits
The amount you can borrow is based on the cost of attendance less other financial aid received, your year in school, and your status as a student. Independent students may borrower more because they are paying for college by themselves. Students may not always qualify for the maximum amount – check with your financial aid office.
Annual Limits:
Year In School
Dependent Students
Independent Students
First Year
$5,500 ($3,500 sub/$2,000 unsub)
$9,500 ($3,500 sub/$6,000 unsub)
Second Year
$6,500 ($4,500 sub/$2,000 unsub)
$10,500 ($4,500 sub/$6,000 unsub)
Third Year & Up
$7,500 ($5,500 sub/$2,000 unsub)
$12,500($5,500 sub/$7,000 unsub)
Graduate Student
N/A
$20,500($8,500 sub/$12,000 unsub)
Lifetime Limits:
Student Status
Limit
Undergraduate Dependent
$31,000(Up to $23,000 may be subsidized)
Undergraduate Independent
$57,500
Graduate or Professional
$138,500 (Up to $65,000 may be subsidized) or $224,000 (for Health Professionals)
Stafford Loan Eligibility
You must be enrolled at least half-time (based on your school’s definition of full and half time status) in a Title IV accredited college or university. Check with your school’s financial aid office or consult its website if you are not sure your school is eligible. And remember, since Stafford student loans are not credit based, don’t worry if you have bad credit.
Stafford Loan for Online Degree
Because online college degrees are offered at many top institutions that accept federal financial aid, you may be able to use a Stafford Loan to pay for your tuition. It primarily depends on whether or not the school you are getting your online degree from is Title IV accredited.
How to Apply for a Stafford Loan
You first must complete the Free Application for Federal Student Aid (FAFSA) or Renewal FAFSA (for returning students). After the FAFSA is processed, your school will review the results and inform you of your college loan eligibility by sending you an award letter. Once your award letter is received, you should apply for the Stafford Loan, as well as look at other federal student loans. You must complete the Master Promissory Note, which is the promissory note/application for your student loan. Your school may require that you complete their form, again – check with your financial aid office. If you are not eligible for federal student loans or need additional money for college, you can then apply for private student loans.
Stafford Loan Disbursement
Your lender will disburse your Stafford Loan funds directly to your school in, typically, two installments – fall semester and spring semester. Your college loan money will be used to pay your tuition and fees. If you have funds left over, your school will credit your account or pay you directly based on your school’s policy.
Stafford Loan Cancellation
Your school must notify you in writing whenever your account is credited with your student loan proceeds. This notification must be sent to you no earlier than 30 days before and no later than 30 days after the school credits your account. You may cancel all or a portion of your loan if you inform your school within 14 days after that date that your school sends you this notice or by the first day of the payment period, whichever is later. Your school can tell you the first day of your payment period.
Stafford Loan Interest Rates
The interest rates for the 2009-2010 academic year are:
Subsidized Stafford loans are at a fixed rate of 5.6%
Unsubsidized Stafford loans are at a fixed rate of 6.8%
All Stafford loans for graduate students are at a fixed rate of 6.8%
The interest rates on existing variable rate Stafford loans will continue to change annually on July 1st, based on the last 91-day T-bill auction in May. The current interest rates on the Stafford loan are 1.88% during the in-school and grace periods and 2.48% during the repayment period. Since these rates change yearly, make sure you check back with College Spot for updates on the upcoming school year.
Stafford Loan Fees
There may be fees associated with the Stafford Loan. The fees vary by lender and can include a 1% default (or guarantee) fee plus a 3% origination fee (origination fees are slowly being phased out, so the fee might be lower this year). The 1% default fee is a fee used by the lender to create a reserve to protect the loan program in instances when borrowers default on their college loans. Some lenders will waive fees as a benefit for using their company as your lender. Default and origination fees, if charged, are deducted from the loan funds before they are sent to the school.
Stafford Loan Repayment Options
The standard repayment term for a Stafford Loan is 10 years. You may be able to extend repayment by deferring or consolidating your federal loans.
You can choose one of the following plans:
The Standard Repayment Plan (or Level Repayment Plan) requires you to pay a fixed amount each month based on your principle and interest but will be no less than $50 or the interest that has accrued.
The Graduated Repayment Plan allows you to make lower payments at the beginning of repayment then, over time, your payments begin to increase. Each of your payments must equal the interest accrued on the loan between scheduled payments. Initial payments generally cover “interest-only” for the first few years. There are different types of graduated plans, so check with your lender on what is available.
The Income-Sensitive Repayment Plan bases your monthly payment on your yearly income and your loan amount. Payments may change as your income rises or falls.
The Extended Repayment Plan is for borrowers with FFELP loans totaling more than $30,000. This plan offers a choice of fixed or graduated payments over a period of up to 25 years.
Other Financial Aid Options
Scholarships are a great way to get extra money for college. If you are a dependent student, you can have your parents take out a Parent PLUS Loan to help cover the cost of your education. Then, after you have exhausted your free-money and federal college loan options, you should consider taking out Private Student Loans. Private student loans lend up to the total cost of education, do not require the FAFSA and, can be used for any education related expense, including computers, books, housing, etc. If you have bad credit, private student loans may not be an option unless you have a co-signer with good credit.
Federal Stafford Loans
Stafford Loans are federal student loans made to college and university students to supplement personal and family resources, college scholarships, college grants, and work-study. They may be subsidized by the U.S. Government or may be unsubsidized depending on the student’s financial need.
Both subsidized and unsubsidized Stafford Loans are guaranteed by the Department of Education either directly or through guarantee agencies. Nearly all students are eligible to receive Federal Stafford Loans regardless of a bad credit score or other financial issues. Both types offer a grace period of six months, which means that no payments are due until six months after graduation or three months after the borrower becomes a less-than-full-time student without graduating. Both types have a fairly modest annual limit. The limit for the academic year beginning in 2007 is $3,500 per year for freshman undergraduate students, $4,500 for sophomore undergraduates, and $5,500 per year for junior and senior undergraduates.
Stafford Loan Borrowing Limits
The amount you can borrow is based on the cost of attendance less other financial aid received, your year in school, and your status as a student. Independent students may borrower more because they are paying for college by themselves. Students may not always qualify for the maximum amount – check with your financial aid office.
Annual Limits:
Lifetime Limits:
Stafford Loan Eligibility
You must be enrolled at least half-time (based on your school’s definition of full and half time status) in a Title IV accredited college or university. Check with your school’s financial aid office or consult its website if you are not sure your school is eligible. And remember, since Stafford student loans are not credit based, don’t worry if you have bad credit.
Stafford Loan for Online Degree
Because online college degrees are offered at many top institutions that accept federal financial aid, you may be able to use a Stafford Loan to pay for your tuition. It primarily depends on whether or not the school you are getting your online degree from is Title IV accredited.
How to Apply for a Stafford Loan
You first must complete the Free Application for Federal Student Aid (FAFSA) or Renewal FAFSA (for returning students). After the FAFSA is processed, your school will review the results and inform you of your college loan eligibility by sending you an award letter. Once your award letter is received, you should apply for the Stafford Loan, as well as look at other federal student loans. You must complete the Master Promissory Note, which is the promissory note/application for your student loan. Your school may require that you complete their form, again – check with your financial aid office. If you are not eligible for federal student loans or need additional money for college, you can then apply for private student loans.
Stafford Loan Disbursement
Your lender will disburse your Stafford Loan funds directly to your school in, typically, two installments – fall semester and spring semester. Your college loan money will be used to pay your tuition and fees. If you have funds left over, your school will credit your account or pay you directly based on your school’s policy.
Stafford Loan Cancellation
Your school must notify you in writing whenever your account is credited with your student loan proceeds. This notification must be sent to you no earlier than 30 days before and no later than 30 days after the school credits your account. You may cancel all or a portion of your loan if you inform your school within 14 days after that date that your school sends you this notice or by the first day of the payment period, whichever is later. Your school can tell you the first day of your payment period.
Stafford Loan Interest Rates
The interest rates for the 2009-2010 academic year are:
The interest rates on existing variable rate Stafford loans will continue to change annually on July 1st, based on the last 91-day T-bill auction in May. The current interest rates on the Stafford loan are 1.88% during the in-school and grace periods and 2.48% during the repayment period. Since these rates change yearly, make sure you check back with College Spot for updates on the upcoming school year.
Stafford Loan Fees
There may be fees associated with the Stafford Loan. The fees vary by lender and can include a 1% default (or guarantee) fee plus a 3% origination fee (origination fees are slowly being phased out, so the fee might be lower this year). The 1% default fee is a fee used by the lender to create a reserve to protect the loan program in instances when borrowers default on their college loans. Some lenders will waive fees as a benefit for using their company as your lender. Default and origination fees, if charged, are deducted from the loan funds before they are sent to the school.
Stafford Loan Repayment Options
The standard repayment term for a Stafford Loan is 10 years. You may be able to extend repayment by deferring or consolidating your federal loans.
You can choose one of the following plans:
Other Financial Aid Options
Scholarships are a great way to get extra money for college. If you are a dependent student, you can have your parents take out a Parent PLUS Loan to help cover the cost of your education. Then, after you have exhausted your free-money and federal college loan options, you should consider taking out Private Student Loans. Private student loans lend up to the total cost of education, do not require the FAFSA and, can be used for any education related expense, including computers, books, housing, etc. If you have bad credit, private student loans may not be an option unless you have a co-signer with good credit.