Student loans can be tricky business, but are part of most students’ college journey. Making your way through securing funds for school can be difficult but it’s possible to get a good education and understand college student loans.
One type of loan that you can get is a subsidized Stafford loan. When speaking of a subsidized loan, it will always be a federal Stafford loan. The term subsidized simply means that you will not be charged interest before it is time to start repaying on the loan. The interest that is accrued while you are in school is actually paid, or subsidized, by the federal government. All student loans have a six-month grace period after you graduate or stop going to school before you must start paying back the funds
Something to keep in mind when considering student loans is that no matter what, they must be paid back. By getting a subsidized Stafford loan, you will save up to thousands of dollars in interest since you aren’t paying it during school. You can find out if you’re eligible for a subsidized loan by filling out a Free Application for Federal Student Aid, or a FAFSA. Receiving a subsidized loan is a decision that is made based on your financial need. Whether you receive a subsidized loan or not, filling out a FAFSA will be your key to receiving federal aid and you can typically apply those funds to the school of your choice.
- Interest is paid by the government while you are in school
- Funds applied to school of your choice
- Simply fill out FAFSA to find out if you qualify
- Typically receive enough money for tuition and book fees
- This loan must be repaid
- Based on financial need, so not everyone is eligible for subsidized loans
- Improper education about student loans can lead to poor financial practices later
- Easy for students to receive more money than they need
Interest will be added to your subsidized loan throughout the time you have it. While you are in school, the government subsidizes the interest. Six months after you graduate or stop taking classes, you are responsible for paying back the loan with interest. The payback amount will vary from person to person depending on how much you borrowed and your interest rate. The interest rates for the next few years are listed below (as of July 2010):
- Academic year 2010-11: 4.5% subsidized; 6.8% unsubsidized
- Academic year 2011-12: 3.4% subsidized; 6.8% unsubsidized
- Academic year 2012-13: 6.8% subsidized; 6.8% unsubsidized
With all of the different things that must be done before going to college, you don’t want to take shortcuts when educating yourself about student loans. Many people have had trouble repaying them because they find they borrowed too much money, or don’t get a good enough job to afford the payments. If you are fortunate enough to make the qualifications, a subsidized loan can be a good way to save some money on interest for student loans.
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