Subsidized student loans: Interest rate?
I’ve been accepted for a federal subsidized student loan and have done a little reading about them, but have a question I’d like cleared up.
I thought a subsidized loan was interest free. However, I read that the interest rate for subsidized loans is fixed at 5.6 percent. Is this the interest that I need to pay WHILE I’m a graduate student, or the interest I’ll pay after a 6 month grace period during which time I’ll be trying to pay the loan off?
Subsidized loans are not interest free. They are “subsidized” by the government. Meaning, the government PAYS the interest while you are enrolled in school and for the 6 mo grace period after you graduate or drop out.
You do not have to pay any payments (interest or otherwise) for a Stafford loan while you are enrolled at least half time as long as the school is an approved school.
This book has a good section on federal stafford loans.
http://studentaid.ed.gov/students/attachments/siteresources/FundingEduBeyondHighSchool_0910.pdf
