What is a Subsidized loan?
This is a low-interest student loan which must be repaid and the government pays interest while you are in school and during grace and deferment periods. Federal Stafford Loans are the most common source of education loan funds, and are available to both graduate and undergraduate students. There are two types, Federal Subsidized and Federal Unsubsidized.
Subsidized loans are student loans that provide interest benefits while the student is attending an education institution as well as selected time periods after the student leaves the institution. The federal government pays the interest on a subsidized loan during the time that the student remains in school and also during the grace period that follows graduation or termination of attendance. A subsidized loan may also be eligible for a deferment period in some cases. Students find that a subsidized loan can ease financial burdens while pursuing a degree. With unsubsidized loans, the student is still responsible for all the interest payments, usually beginning at the time of acceptance into the loan program. Since the federal government takes care of the interest payments before the repayment period commences, a subsidized loan makes it easier for the student to focus on studies and have one less financial issue to handle. While there are a number of different programs that offer stud
The U.S. Department of Education pays the interest on subsidized loans while the student is enrolled in school, during the six month grace period after school, and during authorized deferment periods. Unsubsidized loans always accrue interest. Who can get a Stafford Loan?If youre a regular student enrolled in an eligible program at least half time, you may receive a Direct or FFEL Stafford Loan. You must also meet other general eligibility requirements. Is there any credit check? There is no credit check on potential customers on this loan. How will I receive my Stafford Loan? Your school will disburse your loan in at least two installments; no installment will be greater than half the amount of your loan. Your loan money must first be used to pay for your tuition, fees, and room and board. If loan funds remain, youll receive them by check or in cash, unless you give the school written permission to hold the funds until later in the enrollment period. If youre a first-year undergraduat
The difference between the two loans has to do with how the interest is accumulated. The Subsidized loan does not charge you interest while you are enrolled at least half time. The federal government pays it for you. However, the Unsubsidized loan does charge you interest while you are enrolled; interest begins to accrue as soon as funds are disbursed. You will be billed for the unsubsidized interest quarterly. If you do not make the interest payments, the interest amounts will be added to the principal amount of your loan. Your loan has a variable interest rate that will not exceed 8.25%.
