Student loans are a hot topic in the United States right now. With college tuition prices rising every year, more and more students are taking out loans to pay for school. There are two main types of federal student loans: subsidized and unsubsidized. In this blog post, we will discuss which one is the better choice…assuming you qualify for both.
What are subsidized loans? Subsidized student loans are loans in which the government pays the interest while the student is in school. Unsubsidized student loans are loans in which the student is responsible for paying the interest, no matter what. Subsidized student loans are a better option for students who are not able to pay their interest while they are in school – in other words – they have financial need. Unsubsidized student loans are more expensive, comparatively speaking, but still have benefits such as income-driven repayment plans and forgiveness opportunities.
Federal student loans come from the United States Department of Education. The Department of Education offers both subsidized and unsubsidized student loans, as well as a host of other financial aid options. Federal student loans come from the FAFSA, which stands for the Free Application for Federal Student Aid. It is the application students use to apply for federal student loans, as well as other forms of financial aid. The FAFSA is available at studentaid.gov. The application is free to fill out, and students can use it to apply for both subsidized and unsubsidized student loans.
To fill out the FAFSA, students will need their Social Security number, driver’s license number, and tax information. They will also need information about their parents’ income and assets. Once the application is filled out, students will receive a Student Aid Report (SAR). The SAR will list the types and amounts of financial aid the student is eligible for, although it can be hard to interpret unless you are a financial aid professional. Check out our blog post on how to get started with the FAFSA.
In the end, subsidized student loans are better than unsubsidized student loans because subsidized loans accrue less interest over time. This means that students will pay less money to use the loan over time. Additionally, subsidized loans do not require students to begin making payments until they have graduated or left school, which is typical of other student loans as well. The trick is you have to demonstrate financial need to get subsidized loans, and not everyone will.
