Federal Student Loans

Written by Seth Cotterell
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A majority of students and their families do not have the financial resources to pay for college out-of-pocket. Few people are able to simply write a check for tuition and be done with it. In most cases, students will need to take advantage of financial aid options in order to pay for school. Federal student loans are options that need to be considered.

Federal student loans are what are called direct loans, or Stafford loans. Direct loans mean that the money comes directly from the federal government. The government sends the money directly to your school that then deducts the cost of tuition and fees. If there is money left over, they will give you a refund check for the unused portion. Most students receive at least one student loan in their college careers.

Subsidized and Unsubsidized Federal Student Loans

Federal direct student loans fall into two categories. The first category is the unsubsidized student loan. Every student is eligible to receive an unsubsidized loan. The amount you can receive increases each year you are enrolled. By the time you are a senior, you can receive over $10,000 a year in unsubsidized federal student loans.

The other category is for subsidized federal student loans. The difference between subsidized and unsubsidized loans is how interest in computed. Unsubsidized loans accrue interest while you are enrolled while subsidized loans do not. Because of this, eligibility for subsidized loans is based on financial need, whereas eligibility for unsubsidized loans is not.


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