What are Unsubsidized Student Loans?

Anyone should have a chance at a good education, whether at the age of 6 or over 60. They also have the right to have necessary financial aid available to make this dream a reality. For students in financial need, there are several options available, there are scholarships, grants, Federal Perkins Loans, but unless you have an exceptional academic record, you will most probably end up having to make a Stafford Loan to finance your college studies.

A Stafford Loan is a federal student loan granted to college students from undergraduate level to professional degree students. The premise behind this is that a person who has attained a college degree will earn over 2 times more than a person who has limited education, therefore will be able to afford to pay for his education later. The process of paying after graduating is now loosely coined as the Study Now, Pay Later plan.

There are two types of Stafford Loans: subsidized student loans and unsubsidized student loans. Only a student who is deemed to be in real financial need is qualified for a subsidized Stafford Loan. However, in most cases, when the money runs out, students with subsidized student loans end up getting unsubsidized student loans, too. So many graduates actually end up paying some sort of combination of the two.

Even student whose parents have a job, or some sort of income that can help them get to college should still be able to get unsubsidized student loans to augment their allowance and help them get through college. If you are one of them, there are some things you should be aware of:

You pay the bank for all interest accrued by the loan. Unsubsidized student loans have an interest rate of 6.8% and if you make a loan on your first year, the amount you will have to pay after 4 years can be hefty. In comparison, graduate students have a fixed rate. Knowing how much you will be paying can help you prepare for it when the bill starts coming.

Interest begins right after you get your money. Even if you have a 6-month grace period before you have to start paying off your loan, unlike the subsidized loan which only accrues interest after graduation, unsubsidized student loans starts to accumulate interest right after you cash your check.

The student loan cannot be erased by declaring bankruptcy. Even if you do file for bankruptcy, you still have to pay for the loan as soon as you start earning again. The law states that you have to pay the loan; and
Remember that applying for federal student aid is free – that is your right as a student. If you need help in processing your application, that help is provided free of charge too.

Do not entertain services that say they will process your application or provide you with a federal student loan for a fee. Be aware that there are scams that victimize students seeking for financial aid. If you know of anyone offering this type of service, report him to the nearest authorities. You should be aware that you are protected under the College Scholarship Fraud Protection Act.

So, remember that you have the right to an education. If your parents cannot provide financial aid for that, you can go to the government for help. Of course, getting a student loan constitutes binding yourself to an obligation, but if that will help you get on your way to a better future, why not take the opportunity?

Speak Your Mind