Definition of Subsidized Federal Loans

Subsidized federal loans are loans that are offered to financially-needy students by the U.S. government to help pay for higher educational expenses.

Function

The federal government pays the interest on subsidized federal loans as long as the student is enrolled at least half-time in school. This prevents interest from accruing on the loans while the student is in college.

Types

Subsidized federal loans include subsidized Stafford loans and Perkins loans.

Qualifications

You must complete the Free Application for Federal Student Aid (FAFSA) in order to be considered for subsidized loans. The application takes into account your financial resources and, if you are a dependent, the resources of your parents.

Distribution

The federal government awards subsidized Stafford loans directly to students. For Perkins loans, the federal government distributes a certain amount to each school for the school to award to students in the form of Perkins loans.

Loan Limits

Each year there are limits that cap the amount of federal loans, both subsidized and unsubsidized, that students can borrow. There are both annual limits, how much you can borrow for that year, and cumulative limits, how much you can borrow for the entirety of your study.

References

• FinAid: Student Loans
• Stafford Loan.com: Subsidized Stafford Loans

Resources

• FAFSA