Subsidized loans offer the benefit of lower overall costs due to government-paid interest during certain periods, while unsubsidized loans provide greater flexibility and higher loan limits but at the cost of accruing interest from the time of disbursement.
If you accept the subsidized loan, you don't get charged interest on it until 6 months after graduating. You can return the same money from the loan back to them.
Subsidized loans are the best student loans you can get for the reasons you mentioned: they have all the general protections and advantages of federal loans, plus they don't accrue interest while you are in school or during the grace period.
unsubsidized loans add interest over the years that YOU have to pay for in the long run. subsidized loans add interest that the government pays for and you dont have to owe the interest back. basically, subsidized is much better.
Drawbacks of Subsidized Loans
Subsidized loans can be really helpful if you're eligible, but not all students are. Plus, the amount you can borrow is limited per academic year. So, even if you qualify for one, a subsidized loan might not get you all the money you need for college.
No, you don't have to accept all of the financial aid offered to you. However, it is still very important to note that it is okay to accept all of it.
Which Student Loans Should You Pay First: Subsidized or Unsubsidized? It's a good idea to start paying back unsubsidized student loans first since you'll likely have a higher balance that accrues interest much faster. Once your grace period is over, even subsidized loans will start accruing interest.
Yes, it's possible to be denied a student loan. While most federal student loans don't require a credit check, there are other eligibility requirements you'll need to meet.
If you qualify for subsidized loans, use them first. They are your cheapest option, since the government pays the interest while you're in school.
Both Direct Subsidized Loans and Direct Unsubsidized Loans are offered to students regardless of their credit history and neither will result in a hard inquiry. A Direct PLUS Loan, however, does require a credit check, so if you're considering one, your credit scores may take a slight hit.
After Your Loan Is Disbursed
You have the right to turn down a loan or to request a lower loan amount.
Federal financial aid regulation states that if you withdraw from all of your classes or cease enrollment prior to the 60 percent point of instruction in any term, you will be required to repay all unearned financial aid funds received. A calculation will be performed to determine the repayment amount.
Once you graduate, drop below half-time enrollment, or leave school, your federal student loan goes into repayment. However, if you have a Direct Subsidized, Direct Unsubsidized, or Federal Family Education Loan, you have a six-month grace period before you are required to start making regular payments.
Interest accrual, interest capitalization, fees, deferment, forbearance, and grace periods can all increase your student loan balance. Paying more than the minimum each month, making extra payments, and paying interest while in school can help reduce your loan costs.
Federal student loans are the most common type of student loan. There are four main types of federal student loans: subsidized, unsubsidized, parent loans, and consolidation loans. There are also private student loans, which generally have higher interest rates and stricter requirements.
Which loan should I accept? Given the option, you should accept a Direct Subsidized Loan first. Then, if you still need additional financial aid to pay for college or career school, accept the Direct Unsubsidized Loan.
A Direct Subsidized Loan is a type of federal student loans (made through the William D. Ford Federal Direct Loan Program) where a borrower isn't generally responsible for paying interest while in an in-school, grace*, or deferment period.
Independent undergraduates and dependent students whose parents are unable to obtain PLUS Loans: $57,500 (including up to $23,000 subsidized). Graduate and professional students: $138,500 (or $224,000 for certain medical training) including undergraduate borrowing (including up to $65,500 subsidized).
Differences Between Direct Subsidized Loans and Direct Unsubsidized Loans. In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.
How will I receive my Direct Subsidized Loan or Direct Unsubsidized Loan funds? The school will first apply the loan funds to your school account to pay for tuition, fees, room and board as well as any other school charges. Any additional loan funds will be returned to you.
So the goal is to pay down the principal as quickly as possible. If you send more than the amount due each month, the extra funds are first applied to any outstanding interest and the remaining amount goes directly toward paying down your principal.
What happens to the leftover financial aid money? Well, that depends on you and how you want to handle it. In general, you'll receive a refund. You can then decide whether to send the money back or keep it and use it for future educational expenses.
Student aid programs generally do not have explicit income limits on eligibility.
If you have to take out student loans, try to only borrow what you need to cover the cost of your education. A good guideline is to limit your borrowing to what your future earnings will allow you to repay; however, this might not be possible for all students.