Understanding college financing can be a challenge. Even within the area of government Stafford loans, you've got a variety of terminology to learn: subsidized, unsubsidized, need-based and deferment. Make sure you're making the most of your college financing options, and evaluate subsidized versus unsubsidized Stafford loans.
Quick Primer: Stafford Subsidized Loans
Stafford subsidized loans are awarded by the government, and the government pays the interest on these loans while you're in school. You generally have a six-month period after you graduate before you begin making payments on Stafford subsidized loans, and you may also be eligible for a grace period from payments if you quality for a deferment at some point during the course of your loan.
Quick Primer: Stafford Unsubsidized Loans
The government also offers unsubsidized Stafford loans, but the interest payments on them aren't picked up by the government while you're in school. You may still defer payments until you graduate, but your unsubsidized Stafford loans continue to accrue interest throughout your college years. If you choose to defer your interest payments, your Stafford loan amount is just going to grow until you begin making the interest payments; therefore, you should try to make interest payments while you're in school if you can afford it.
Which Loan Is Better?
Given that the interest on unsubsidized Stafford loans accrues during school while the government pays interest on subsidized Stafford loans, Stafford subsidized loans are preferable to the unsubsidized variety. However, Stafford subsidized loans are generally awarded in smaller dollar amounts than unsubsidized Stafford loans, so, if you need additional funds to finance your college education, you may need both types of Stafford loans. As long as you don't go over the annual maximum for Stafford loans, you can borrow both subsidized and unsubsidized loans.
Who Qualifies for Subsidized Stafford Loans?
tafford subsidized loans are awarded on a need-based system. If you can demonstrate financial need and are at least a half-time student in good standing, you may qualify for Stafford subsidized loans. However, if you're not taking enough classes to register as at least a half-time student, or if your performance is poor, you may not qualify for Stafford subsidized loans.
The Ratio of Subsidized Versus Unsubsidized Stafford Loans
If you can demonstrate financial need and meet the other criteria for subsidized Stafford loans, borrow as much as possible in Stafford subsidized loans to give yourself a break on interest. The amount of financial aid you can receive in unsubsidized Stafford loans depends on your total financial aid package, including the financial aid you receive from the college, how much the college costs and your student year.
Stafford loans are subject to an annual maximum that changes from year to year, but the maximum typically increases by one to two thousand dollars per student year; for example, you may be eligible for $5,500 as a freshman or $6,500 as a sophomore.
 | Many different types of federal financial aid are available, including Pell Grants, Perkins Loans, Stafford Loans and PLUS Loans, so learning about the various options is an essential first step in any strategy for financing a college education. |
 | A student can expect to qualify for a Federal Pell Grant if he or she meets certain conditions set forth in the application process. Generally, Federal Pell Grants are awarded to families who apply for a Pell Grant with incomes of less than $20,000, although there are exceptions based on a student's total criteria. |
 | A Federal Stafford Loan is a loan structured under the Federal Student Loan Program that allows undergraduate and graduate students to borrow money to attend college. They are designed to supplement a student's personal finances and family contributions to higher education. |
A Federal Perkins loan is one of many ways in which the government offers funds so that students with financial needs can attend college. This federal loan program is available from the U.S. Department of Education and helps with the cost of undergraduate programs and graduate programs. |
Going into debt while you're in college is frighteningly easy. With the demands of your classes and a new social life, you might find that swiping that credit card is the easiest way to get the things you want and need. Rather than letting your credit card bills pile up, follow these tips for minimizing your debt while you are in college. |
