- What is a Subsidized Loan?
- How does a Subsidized Loan work?
- What are the alternatives to a Subsidized Loan?
subsidized student loan, what is it? A subsidized student loan is a need-based loan. The federal government pays the interest while the student is in school at least half-time, during the six-month grace period after graduation, and during deferment periods.
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What is a Subsidized Loan?
A subsidized student loan is a need-based loan offered by the government to help students pay for college. The loan is subsidized, which means the government pays the interest while the student is in school. This loan is available to undergraduate students who demonstrate financial need.
What are the benefits of a subsidized loan?
Subsidized loans are need-based loans, meaning they are awarded based on your financial need. The main benefit of a subsidized loan is that the government pays the interest while you are in school and during your grace period. This can save you a lot of money over the life of your loan.
How do I qualify for a subsidized loan?
To qualify for a subsidized loan, you must demonstrate financial need as determined by the information you provide on your Free Application for Federal Student Aid (FAFSA®) form.
If you qualify, the government will pay (subsidize) the interest that accrues on your loan while you’re in an in-school, grace, or deferment period. For Direct Subsidized Loans first disbursed on or after July 1, 2012, and before July 1, 2014, graduate and professional degree students are not eligible for interest subsidy during their six-month grace period.
For Direct Subsidized Loans with a first disbursement on or after July 1, 2014, but before July 1, 2015, graduate or professional degree students will be responsible for paying all interest that accrues during their grace period. If you choose to pay the interest that accrues during your grace period or periods of deferment or forbearance, it will reduce the amount of debt you will have when you enter repayment.
How does a Subsidized Loan work?
A subsidized student loan is a need-based loan that is awarded to students who demonstrate financial need. The US government pays the interest on the loan while the student is in school, during the grace period, and during any deferment periods. This type of loan is available to undergraduate and graduate students.
What is the interest rate for a subsidized loan?
The interest rate for a subsidized loan is determined by the government and is usually lower than the rate for an unsubsidized loan. The government pays the interest on a subsidized loan while you are in school and during certain other periods.
What are the repayment terms for a subsidized loan?
The repayment terms for a subsidized loan are different from those for an unsubsidized loan. With a subsidized loan, you don’t have to start repaying the principal (the amount you borrowed) until after you graduate or leave school. The federal government pays the interest on a subsidized loan while you’re in school and during your grace period.
What are the alternatives to a Subsidized Loan?
A subsidized student loan is a federal loan that is given to undergraduate students who demonstrate financial need. The interest on the loan is paid for by the government while the student is in school. This type of loan is one of the best options for students because it has a low interest rate and does not require any payments until after graduation. However, there are some alternatives to a subsidized loan that you should be aware of.
What is an unsubsidized loan?
An unsubsidized loan is a student loan that is not subsidized by the federal government. This means that the borrower is responsible for paying all of the interest that accrues on the loan. Unsubsidized loans are available to both undergraduate and graduate students.
What is a PLUS loan?
A PLUS loan is a type of federal student loan available to the parents of dependent undergraduate students and to graduate or professional degree students. PLUS loans can help pay for education expenses up to the cost of attendance minus any other financial aid the student may receive.
PLUS loans are made by the U.S. Department of Education ( DOE) and are insured by the Federal Government. They have a fixed interest rate that is higher than the rate for subsidized Stafford loans but lower than the rate for unsubsidized Stafford loans.
PLUS loans are not based on financial need; however, the student must not have an adverse credit history in order to qualify.
If you are a parent or graduate/professional student who wants to apply for a PLUS loan, you will need to complete a FAFSA form and then sign a Master Promissory Note ( MPN).
What is a private loan?
A private student loan is a non-federal loan made by a lender such as a bank, credit union, state agency, or a school. If you have maxed out your federal student loan options, you may consider a private student loan to help cover the costs of your education.
Private student loans usually require a credit check, and typically have higher interest rates and fees than federal student loans. You may also have a smaller grace period after graduation before you are required to begin making payments.
Before considering a private student loan, you should always fill out the Free Application for Federal Student Aid (FAFSA®) form to see if you are eligible for federal grants, work-study, or federal loans first. You may also want to consider other options such as scholarships or grants.