The Pros And Cons Of Subsidized Loans

Register to read the introduction… To be eligible for these loans, students must be registered as a full time or part time student in an institution that is a part of the Direct Loan Program. Another requirement is that student must be in a program that will eventually lead to a certificate or degree. Subsidized Loans are offered to students’ based on individual needs, and this is decided based on the information given when completing FAFSA. Paul Basken states, “The federal government offers subsidized loans to college students both directly from the Education Department and indirectly through banks and other private lenders.” These loans are offered without a credit check or cosigner. There is a limit to the amount that can borrow each year, and that amount varies based on if the student is a dependent or independent. The interests on subsidized loans are paid by the government while students are still enrolled in school. This means the amount that is borrowed, is the amount to be repaid. Interest starts to accumulate after students graduate or drops out and the repayment terms …show more content…
Some of those students don’t have a full understanding of the terms of the loans. In her book How to Find A Scholarship Online, Shannon Turlington states “Many students and their parents do not take the time to understand what may seem, at first glance” (3). It is very important to be informed before accepting these loans. Norma Carmona and Kim Thompson also state, “This is critical because the terms and conditions of different kinds of loans vary. For example, you are not responsible for interest on a subsidized Stafford loan until you are in repayment. Unsubsidized Stafford loans, however, begin to accrue interest when you get the money”. These students sign the promissory notes sometimes without reading the terms laid out to them. Some students don’t think about things such as, if they don’t withdraw from a class before the deadline, they have to repay their loans in full for that class. Students also have to repay their loans even if they don’t graduate from college. Students need to be aware that after the grace period that was given ends, the loans needs to start being repaid even if they don’t get a bill. Carmona and Thompson also state, “The federal loan programs offer students various options to help avoid default. When you leave college or graduate school, you are allowed a grace period -- usually a six-month period during which you are not required to make payments on your student loans.” A repayment plan is important after the grace period because it helps a student to determine what they can afford to pay each