About Subsidized and Unsubsidized Loans
There are two types of loans on offer to you, those being subsidized loans and unsubsidized loans. You will need to understand the basics of both of these types before you sign for any loan.
Both of these loans are federal student loans that are offered by the US Department of Education. In order to qualify for either of these loans you must be enrolled at least half-time at your school. They both offer a six-month grace period before you have to start repaying the loans.
The major difference between these two loans is the interest and the amount that you are able to borrow. With a subsidized loan you will not be charged any interest whilst you are enrolled in school and during your grace period. With unsubsidized loans, the interest starts to accrue from the date of your first loan disbursement. With both of these loans the amount that you are able to borrow is determined by your school, which will use several pieces of information to calculate what you need.
If you need to take a loan to cover the costs of college then you should only borrow what you need. The subsidized loan has more benefits, so you should accept this type of loan first. If you do have to take an unsubsidized loan, then remember that you will need to pay the interest on the loan that accrues.
You may find that you don’t need the entire amount that is offered to you. You are able to take a lower amount then what they offer. If you find that you do need more money later on for school, then you will need to speak to your school and they will give you more loan money.
If you have an unsubsidized loan, then you should try and make interest payments right away as this will save you money in the long run. When you leave school the interest that you have incurred whilst in school will be added to your principal loan amount. This also means that after school, interest will incur on a higher principal amount. It is best to pay the interest whilst in school to avoid this.