What is an unsubsidized federal loan for a college student?

guenndu: What is an unsubsidized federal loan for a college student?
For my son’s financial aid package from his school of choice, a portion was a FEE loan, unsubsidized. Are there specific reasons to accept or deny this type of loan, from your experience? Why wouldn’t I just get a loan from a bank with a better interest rate?

Answers and Views:

Answer by Unknown
This Unsubsidized federal Stafford loan is your SONS loan to repay and it is unlikely any bank will give him a loan as the goverment does. Stafford FEEL loans do not require a cosigner or repayment until he drops out or graduates. THis is not the case with any bank loan he attempts to get. Also the interest rate is pretty low and FIXED at at 6.8%. Again, you might not get this at any bank.

Answer by Jillian
For subsidized loans, you don’t accrue interest while you’re in school. With subsidized, you do accrue interest, you just don’t need to pay it, or generally you can pay the interest only and the principal balance won’t go up. When you get to the end of college, you can consolidate them all into one consolidation loan, and you don’t have to start repaying them until 5 months after college ends. A bank loan if you can get one with better interest, you’ll have to start repaying it right away instead of in a few years, and you won’t be able to roll it into a consolidation loan. There may also be some impact on the tax credits one can receive from being in school. If it is a lower interest rate, and you can swing paying it starting right away, you might be better off going with the bank oan. Generally, for most students the unsubsidized loan is worth taking though.

Answer by depressible
Virtually all students enrolled at least half-time may borrow a Federal Stafford or Direct Loan. The Stafford/Direct and PLUS Loan programs are by far the largest of all the aid programs, making up over 55% of the total $ 90 billion annual aid portfolio. There are two different versions of the Stafford/Direct Loan: subsidized and unsubsidized. If you borrow, you will want to try to obtain the subsidized Stafford Loan, if possible though it is based on your demonstrated financial need.

A subsidized Stafford Loan means there are no payments required until six months after the student ceases to be at least a half-time student though there are no pre-payment penalties on any federal loan. The federal government pays the interest as long as the student is in school at least “half-time” (usually six units per term for undergraduates and four units for graduate students). Interest does not accrue and payments do not begin until a six-month “grace” period transpires after the student leaves school. In order to qualify for a subsidized Stafford Loan, you must demonstrate financial need for the funds by filing the FAFSA application each year.

Answer by Nelle
An unsubsidized loan is a federal loan that the government doesn’t pay the interest on while you are in school. A subsidized loan is one where the government pays the interest while you are a full time student.

I think that if you have to borrow money, the federal loans are the way to go because they carry a lower rate of interest than a private loan which can run above 10%.

Answer by laicisms
An unsubsidized loan can be taken out for any amount, whereas a financial aid need calculation is made for subsidized loans. The one advantage remains that you don’t have to pay the interest while the student is still in school. However, that interest accrues and becomes part of the principal. So bottom line, you are better off getting a loan from a bank with a better interest rate.

Answer by Nat Fayer
unsubsidized works ok. subsidized is better financially, but i recommend them if you are on a budget. college cost so many unseen money.

good luck you and your son

i recomend gettting the unsubsidized