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Deferring Student Loan Payments

Stafford Student Loans

The federal government’s low-interest loans for students are called Stafford loans. There are two main kinds of Stafford loans. The Stafford loan program administered by the Federal Family Education Loan Program (FFELP) provides a government guarantee for loans made by banks, credit unions, or savings & loan associations. The Stafford loan program administered by the Federal Direct Student Loan Program (FDSLP) provides money for "direct loans" with funds that go directly to the student through the student’s institution of higher education.

A student who shows financial need may be able to get the federal government to pay interest on the loan while the student is still enrolled in school. These subsidized interest payments are available from either of the Stafford Loan programs. However, all students, regardless of need, are eligible to receive unsubsidized Stafford loans. Under the unsubsidized plan, the student is liable for the interest, although these interest payments may be deferred until after the student graduates.

Stafford loans are attractive because they do not require a credit check or collateral. A number of deferment options and extended repayment plans are available. A student’s eligibility for the loan often depends on need as determined by the U.S. Department of Education or the school’s financial aid office. Those who costs are not met by a Stafford loan can usually get a private conventional loan to cover the discrepancy.

The Free Application for Federal Student Aid

Students who want financial aid from the U.S. government must fill out and submit the Free Application for Federal Student Aid (FAFSA) to the U.S. Department of Education. The department suggests that such an application be made as soon as possible. The form provides a standardized way of determining financial aid eligibility, and is used in conjunction with checks with other government agencies such as the Social Security Administration and Selective Service, to make sure the applicant is eligible for federal student aid. The Department of Education then forwards this information electronically to the student’s school.

PLUS Loans

Parents with satisfactory credit whose dependent children are eligible to attend an eligible college, university, or trade school may be able to get a PLUS loan from the federal government or from a private lender. Such loans can be used to pay for the student’s entire cost of attendance, minus the amount of any other financial aid. All parents who qualify may get a PLUS loan, regardless of income or amount of financial assets.