Subsidized Student Loans

About Subsidized Student Loans
Student loans are a form of financial aid offered to students who require financial assistance to pursue their educational goals. The federal government offers subsidized student loans to students who demonstrate financial need as a result of information provided in their Free Application for Federal Student Aid (FAFSA). Subsidized student loans are preferred over unsubsidized federal loans and private student loans, as they have many unique benefits over other student loans.

Subsidized student loans are unique among all other student loans in that the federal government pays the interest on the loans while the student is in school. In addition, subsidized student loans usually have lower interest rates than other types of student loans. Yet another benefit is that subsidized student loans have more flexible repayment terms than most private student loans. There are borrowing limits on the maximum amount of money you eligible for through one of these loans, however, and factors like your year in school and if you are a dependent or independent student will determine the amount you can receive. With the help of Subsidized Student Loans, students can pay for their tuition, housing, and other educational expenses.

Types of Subsidized Student Loans
Federal Perkins loans and the Subsidized Stafford loan are the two types of subsidized student loans that the federal government offers. While subsidized Stafford Loans are relatively widely available to students with demonstrated need, only students who demonstrate exceptional financial need are eligible for Subsidized Perkins loans. The current interest rate on subsidized Perkins Loans is 5%, and they have a 9-month grace period beginning after graduation before repayment begins. The current interest rate for subsidized Stafford loans is 3.4%, and they have a 6-month grace period before repayment begins.