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Subsidized and Unsubsidized Loans for the Students

11 June, 2011

Education is one of the most expensive pursuits of a person. Many students are facing difficulty with regard to financing their education, not to mention other expenses appurtenant thereto.
Subsidized and unsubsidized cash advance are designed to help students cope with the financial aspect of education. But what is the difference between these two? The distinction lies on the payment of interest.
With subsidized loan, a student who borrows money is not directly responsible for the payment of interest but the federal government. If, however, the student failed to attend at least halftime in school, then he will be responsible for paying the interest. The grant of loan is based on financial need, which refers to the amount needed to attend college after deducting family contribution.
Subsidized loans for bad credit are granted only to qualified students who want to obtain a degree. To be eligible under the Federal Pell Grant, the student must be a US citizen or permanent resident, possesses high school diploma or had been home-schooled, has a Social Security number and for male between ages 18 and 25, must be registered with Selective Service. In addition, the student must submit Free Application for Federal Student Aid (FAFSA) to certify that the funds will be used solely on education and that he or she is not in default of any federal student loan.
In contrast, the student is responsible for paying the interest of unsubsidized loan from the moment of disbursement to the school. But while in school, he may shun from paying interest by capitalizing it. In such case, the interest is added to the principal amount.
Unsubsidized loan is awarded without regard to financial need. This gives the student belonging to high earning family a chance to obtain a loan to support his educational expenses.
With these options, the students will be given ample opportunity to pursue their education. The students can enjoy the benefits of these loans as long as they continue to pursue their degree.

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