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Subsidized and unsubsidized forms of financial aid to the students |
By brain strom
 Student loans in the form of Federal student loans in the United States are categorized under Title IV of the Higher Education Act. Such forms of loans are available to both college and university students as funds disbursed directly to the schools and are also used to supplement personal and family resources, grants, scholarships and work-study. They are usually subsidized by the U.S. Government but may also be unsubsidized depending on the students financial need.
Whether subsidized or unsubsidized both forms are guaranteed by the Department of Education directly or through any guaranty agencies. Regardless of the credit score or other financial issues nearly all students are eligible to receive these loans. Both the types do offer a grace period of six months that means that no payment are due until six months after graduation or after the borrower becomes less than half-time student without graduating. They have a fairly modest annual limits. The dependent undergraduate limit effective for loans disbursed may vary from $5,500 to $ 7,500 per year for freshman, sophomore or senior undergraduate student, as well as students enrolled in teacher
certification coursework for graduate programs.
For independent undergraduates the limits are slightly higher varying from $ 9,500 to $ 12,500 per year for all the three categories. Subsidized loans are usually offered to students with a demonstrated financial need but such need may vary from school to school with interest rates payable while the student is still in college. Unsubsidized loans are also guaranteed by the Government, but here the Government does not pay interest for the student, rather the interest accrues during the college. The accrued interest for such loans is usually capitalized into the loan amount and the borrower will have to begin making the payments on the accumulated total. Students may choose to pay the interest while still in college while few students choose to exercise this option.
Federal loans for any graduate students usually does have a much higher limits although the limits may differ for certain courses of study. The students could also take advantage of the Federal Perkins loan that has a limit of $ 6000 per year for graduate students. Such loans are usually regarded as need-based student loans that is offered by the U.S. Department of Education and is used to assist college students in funding for their post secondary education program. Such loans usually carry a fixed interest rate of 5% for the duration of ten year repayment period and a nine month grace period so that the borrower can begin with the repayment in the tenth month upon graduating, falling below half-time status or withdrawing from the college and university.
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