Subsidized Student Loans
The Federal government awards two types of loans to college
students: subsidized student loans and unsubsidized student
loans. Unsubsidized loans, as the name suggests, do not involve
any sort of special help or compensation for the borrower.
In the case of unsubsidized loans, the borrower must be
repaying not only the loan, but also the interest that has
accrued, upon graduation.
This is not so with subsidized student loans. Upon
graduation, a student must only repay the initial amount
borrowed, not the interest accrued. The Federal government will
actually pay the interest accrued while the student is
enrolled.
If you're planning to enroll in the upcoming semester, you
probably think that subsidized student loans sound great and
you might wonder how you can get one. Unfortunately, the only
way you can receive subsidized student loans is if the
government deems you eligible.
The government will largely base this on your expected
family contribution (EFC) or the total amount that they
estimate that your family should be able to contribute.
If you've ever filled out a FAFSA and have generated one of
these EFC numbers, you more than likely thought that the amount
was simply unrealistic, as is the case in many instances. In
many cases, this number will be as much as or more than 10% of
you and your parents' income combined, regardless of whether or
not your parents can or are willing to contribute to your
loans.
If you have an unusually high EFC, do not despair. While it
is hard to get subsidized student loans under such
circumstances, it is not possible. You can always contact your
bursar and ask for help with filing “special circumstances”
papers.
This will not only allow you to increase the total amount of
Federal unsubsidized loans you receive, but it also may help
you get more subsidized loans and possibly some
grants.
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