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Subsidized Student Loan

Student Loan Refinance
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When looking for ways to pay for college, students should consider subsidized student loans. Subsidized student loans are loans that are partly funded from public monies. In essence, the federal government is paying to keep students in school. Thus, it makes sense that the two subsidized loan programs are federally funded.

Subsidized loans were created during the Johnson administration in 1965. It was his vision that college students receive financial aid in the form of loans and scholarships, colleges and universities receive additional education resources and a National Teachers Corp be established. It's interesting to note that the current student loan reforms are simply amendments to Johnson's original plan, some forty-five years later.

Though both loans offer borrowers the same perks - (free interest for the time spent in school), there are several additional similarities and differences.

Subsidized Student Loan Similarities:

  1. They are both offered in a subsidized and unsubsidized version. The unsubsidized version will accrue interest from loan origination.
  2. They are both sponsored by the U.S. government, thus they both require the FAFSA application form in order to apply. On the single form, a student can apply for both types of loans.
  3. In both cases, the subsidized versions allow students to attend school while the interest accruing on their loans is being paid by the government. They are both sponsored by the U.S. government.
  4. Aside from grants and scholarships, subsidized student loans are the most affordable types of student aid available. Upon graduation the borrower starts of owing just the principal.
  5. Both loans feature a ten year repayment window.
  6. The Perkins and Stafford loans both have low origination fees.
  7. Both loans offer students the ability to place loans in forbearance status, should they be experiencing economic hardship.

Subsidized Student Loan Differences:

  1. The subsidized version of the Perkins loan is available based on need, but Stafford loans are not income-based.
  2. The Perkins loan offers a nine-month grace period, while the Stafford loan only offers six months.

Despite their differences, students would benefit from receiving either the Perkins loan, or the Stafford loan, as part of their financial package.

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