Subsidized and Unsubsidized Stafford Student Loans

Stafford loans were established by Congress in 1965 as part of the FFELP (Federal Family Education Loan Program) to provide financial aid for students. They were originally intended to help student who were ‘in need’ but just what was meant by the term ‘in need’ was not entirely clear and the program was rapidly expanded. Today, Stafford loans account for more than 90% of the $50 billion dollars plus which is distributed each year to the various FFELP programs.
One way in which the definition of ‘in need’ was quickly broadened was to create two different forms of Stafford loan - subsidized and unsubsidized.
In the case of subsidized loans, the Federal Government pays the interest charges which would ordinarily accrue from the date on which the loan is originated until payments start. Usually, no payments are made while the student is attending school (as long as the program is a half-time program or greater) and for a further six month grace period after completion of the course. Students can however request that payments begin earlier if they wish to start repaying their loan before the usual date.
Because the government pays interest on these loans they are normally need-based in that aid […]

Full Article At: KnowHow-Now.com Articles

Bookmark to: