How Do Student Stafford Loans Compare?

Student Stafford Loans typically offer both lower rates and better terms than private sector loan options. Stafford Loans are partially need-based, meaning the greatest advantages are given to those students who cannot otherwise gain funding due to income levels. All students who qualify for Stafford Loans will capitalize on key advantages:

Low interest rates - The main advantage of a federal loan over a private loan is the reduced cost of financing. The government is only looking to make back its investment, plus interest, not to make a large profit like a bank.

Fixed interest rate - All government direct loans are given in fixed-rate terms. This protects a borrower from interest rate spikes that may drive monthly payments to higher amounts.

No prepayment fees - If you are able to pay off your Stafford Loan early, you can do so without any penalty at all. This is unheard of in the private sector, where lenders will both assess fees and report you to credit bureaus for paying off loans ahead of schedule.

Better payment plans - You will have more flexibility with your payment plans including the opportunity for subsidized loans, loan deferral, consolidation and even debt forgiveness through public service.


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