What is a Subsidized Student Loan?

A subsidized student loan is a lending instrument designed to help pay for the costs of higher education. This type of student loan has its interest subsidized by the federal government while education is ongoing and if and when a loan is in deferment status.

Features of a Subsidized Student Loan

Subsidized student loans are considered among the best for students who must take on debt to obtain degrees because they offer:

  • Low interest rates that are fixed
  • A deferment of student loan repayment until at least six months after graduation
  • Acceptance requirements that are not solely based on credit standing

Eligibility for a Subsidized Student Loan

In order to obtain a subsidized student loan, an applicant must:

  • Be an American citizen or eligible non-citizen
  • Be enrolled at least part-time in an accredited educational program
  • Complete all federal loan paperwork
  • Have possession of a high school diploma or GED

In addition to subsidized loans, the federal government also backs unsubsidized student loan vehicles. This type of loan will involve the accrual of interest while a student is enrolled in school.

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