Subsidized Stafford loans are fixed interest student loans offered by the US federal government to cover educational expenses. The loan is not based on credit, but eligibility is determined by the Free Application for Federal Student Aid (FAFSA). Repayment begins after graduation or an agreed deferment period.
A subsidized Stafford loan is a student loan offered to college students by the United States federal government. The loan has a fixed interest rate and can be used to cover tuition, room and board, books, or any other educational expense. Unlike an unsubsidized Stafford loan, the loan does not earn interest while the borrower is in college. The federal government subsidizes the interest on the loan while a student is in college at least half time. Once a student graduates from college, he or she begins to repay the loan.
The loan is not based on credit; however, the borrower is limited by their school in the amount they can borrow each school year. If a student already has their expenses covered by other scholarships, grants, or loans, the college may limit the student’s eligible amount. The amount of money borrowed can also increase as the student progresses through the college levels. For example, a senior or graduate student may be awarded twice as much as a freshman.
To be eligible for a subsidized Stafford loan, a student must be a United States citizen or an eligible non-citizen, such as a legal refugee. Applicants must have graduated from high school or have passed an equivalency exam. The federal government also requires borrowers to complete the Free Application for Federal Student Aid (FAFSA), a form that records the financial means of the borrower’s parents to determine how much they can afford to contribute toward tuition.
If the borrower’s parents are found to earn enough money to finance tuition, the borrower may be eligible for little or no aid from the federal government. A subsidized Stafford loan cannot be used if parents have the financial means, but choose not to contribute to a student’s college education due to personal objections, such as disapproval of religious affiliations or the location of the college. In that case, a student could apply for private loans or scholarships.
Once a student is determined eligible for federal tuition assistance, they can apply for a subsidized Stafford loan through their college. After a student is approved, the money can be deposited into the student’s school account or mailed as a personal check. To maintain her eligibility, a student must remain enrolled in an accredited college or university program at least half-time. The borrower begins to repay the loan after graduation or the agreed deferment period established in the loan agreement.
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