What is a subsidized federal student loan?

About subsidized Federal student loans

With a subsidized student loan, the interest on the loan is paid by the government while the student is in school and during periods of grace or deferment.

Student loans may be subsidized if a student can demonstrate financial need.  Financial need is based on income and resources compared to the cost of attending a school. 

In the case of a federal subsidized student loan, the government pays the interest while the student is enrolled in classes (at least part-time), during the six month post grad grace period and during periods of deferment for some loans.

If you believe you might qualify for a subsidized federal student loan, the first thing you’ll need to do is fill out a FAFSA (Free Application for Federal Student Aid) form.  Before you get started, make sure you have the following items close at hand:

• Social Security number
• Driver’s license
• Federal income tax returns (and your spouse’s if you’re married)
• Bank statements
• Investment or business records
• Alien registration number or permanent resident card (if not a U.S. citizen)

If you’ve never filled out a FAFSA before, it’s recommended that you print the sheet first, fill it in with a pen or pencil, and then retype the information back onto the site. By doing this, you’ll be better able to organize your information and eliminate unnecessary mistakes and delays to your application.