Subsidized Loans are loans for undergraduate students with financial need, as determined by your cost of attendance minus expected family contribution and other financial aid (such as grants or scholarships). Subsidized Loans do not accrue interest while you are in school at least half-time or during deferment periods.
Also, do I have to accept my unsubsidized loan?
It’s important to know that you’re under no obligation to accept all the federal student loan money made available to you. You can accept all, some or none of the federal student loans you’re offered. Your award letter may also include scholarships or grants, which is genuinely free money you never have to pay back.
Likewise, how do you qualify for a subsidized loan?
To be eligible for a subsidized loan, you must:
- Be an undergraduate student.
- Be able to prove financial need.
- Be enrolled at a school at least half-time.
- Be enrolled in a program that can lead to a degree or certificate awarded by the school.
Is fafsa a loan?
The FAFSA is not a loan. … The FAFSA, or Free Application for Federal Student Aid, is used to apply for several types of financial aid, including grants, student employment and federal student loans. Grants are a form of gift aid, which does not need to be repaid.
You should accept the subsidized loan first because it has more benefits. If you have to accept an unsubsidized loan, remember that you’re responsible for all the interest that accrues on that loan.
There are four types of federal student loans available:
- Direct subsidized loans.
- Direct unsubsidized loans.
- Direct PLUS loans.
- Direct consolidation loans.
$57,500 for undergraduates-No more than $23,000 of this amount may be in subsidized loans. $138,500 for graduate or professional students-No more than $65,500 of this amount may be in subsidized loans. The graduate aggregate limit includes all federal loans received for undergraduate study.
Direct unsubsidized loans are loans that help cover the cost of higher education for both undergraduate and graduate or professional students at a four-year college or university, community college, or trade, career, or technical school.
Financial need is the difference between the cost of attendance (COA) at a school and your Expected Family Contribution (EFC). While COA varies from school to school, your EFC does not change based on the school you attend.
Because the federal government pays the interest during the periods noted above, subsidized loans will save you money. They offer flexible repayment options you won’t find with private loans. You’ll pay lower interest rates on these loans than on comparable private student loans.
Subsidized: Interest is paid by the Education Department while you’re enrolled at least half time in college. Unsubsidized: Interest begins accruing as soon as the loan is disbursed, including while students are enrolled in school. Subsidized: No payments are due in the first six months after you leave school.
Definition of unsubsidized
: not aided or promoted with public money : not subsidized unsubsidized housing.
Parents and graduate students may be eligible for PLUS loans, another type of federal student loan. At 7.08%, these have the highest interest rate of any federal student loan. It should be noted that there is an aggregate limit to how much money students may borrow on federal loans.
Subsidized loans offer many benefits if you qualify for them. While these loans are not necessarily better than unsubsidized ones, they do offer borrowers a lower interest rate than their unsubsidized counterparts.