Subsidized vs Unsubsidized Student Loans: How Do Interest Rates Work?
ggo to university in the United States can be an expensive affair, so it’s important that you get the best deal possible if you take out a student loan.
There are two types of loan available through the federal government’s direct loan program, these being subsidized student loans and unsubsidized student loans.
While anyone can borrow money for their education using the unsubsidized student loansyou must qualify in order to get the subsidized student loans.
How you are able to qualify for the subsidized student loans is by demonstrating financial need, which will be determined when you apply using the Free Application for Federal Student Aid (FAFSA).
the subsidized student loan program is there for undergraduate students who are enrolled at least half-time, while the unsubsidized student loan The program is available to undergraduate, graduate, and professional degree students enrolled at least half-time.
Student loan interest rates
There is a fixed annual percentage rate for subsidized student loansas it amounts to 3.73% for loans granted on or after July 1, 2021, until June 30, 2022.
While the annual percentage rate of charge for unsubsidized student loans is also 3.73% for undergraduate loans granted from July 1, 2021 until June 30, 2022, it increases for other loans.
For example, a unsubsidized college or vocational loan has a fixed annual rate of 5.28% for loans granted from July 1, 2021 until June 30, 2022. unsubsidized PLUS loans over the same period, there is a fixed annual percentage rate of 6.28 percent.
Students are always advised to try to take a federal loan first, because private student loans carry a higher interest rate.