What You Need to Know About Subsidized Loans?

Subsidized Loans are loans for which the borrower needn’t pay the interest.  The interest of Subsidized Loans will be charged periodically by another party based on the annual percentage rate (APR).

Anyone can subsidize a subsidized loan. Different Subsidized Loans are subsidized by various organizations, including the US government, a charity or social group, depending on the type of loans.

According to the source of the loan you apply for, Subsidized Loans have different requirements on qualifications. For instance, some housing loans, including first time hone buyer loans, maybe subsidize your loan if you live in a certain area and earn less than a set amount. Student loans require you to demonstrate your financial need, resulting from the gap between your income or resources and the cost of attending a school. Besides, student subsidized loans are only subsidized while you’re enrolled at least half time or full time by a school, during a deferment period and during a grace period. As long as you don’t qualify for these criteria, you should pay interest by yourselves. The most common subsidized loans are Perkins loans and Stafford loans.

Federal Stafford Loan

Federal Stafford Loan is the main part of most students’ financial aid packages. Students of undergraduate and graduate schools are able to borrow a big amount of money without regard to their financial needs. The interest of Federal Stafford Loan is paid by the federal government during the period when students are at school. Federal Stafford Loan will not add its value to its original amount until you graduate. The amount of subsidized Stanford loans which students are able to get is based on two factors: whether you are a dependent of his parents and his grade.

  1.  The amount of the loan for a freshman reaches up to $3,500.
  2.  The limit of the Federal Stafford Loan a sophomore is able to get is $4,500.
  3.  For junior and senior students, the amount will be able to go up to $5,500.
  4.  $20,500 per year will be offered to students who earn graduate or professional degree.

Independent students are able to get a bigger amount of loans than those dependent students.

Federal Perkins Loan

Federal Perkins Loan is considered as the bets type of student loan. Different from Stafford loan, it serves students who demonstrate an exceptional financial need. Generally speaking, Federal Perkins Loan has a relative lower limit but more generous terms, including fees, repayment options, interest rate and grace period. The maximum amount a student is able to get each year is determined by whether they are undergraduate or not. Undergraduate students can get $4,000 each year and $20,000 totally. For graduate students, Federal Perkins Loan will offer a $6,000 per year. There’s a cumulative limit of $40,000 which combined the limit of undergraduate and graduate periods.

There’re no original fees charged by Federal Perkins Loan. After graduation, the applicants will be given a grace period of 9 months. The loan will be repaid with at most ten years and the minimum payment of this loan is $40 each month. Besides, Federal Perkins Loan can be forgiven for certain public service.


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Can I Consolidate My Subsidized Student Loans?

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