Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Subsidized Vs. Unsubsidized and other Student Loan topics.
Most people will agree that subsidized Stafford Loans are preferred over unsubsidized. Generally speaking, you will tend to finish college with less student loan debt because the U.S. Department of Education covers the interest while you are not in repayment.
There are, however, limits placed on these loans. The best way to get through financing your college career will be to maximize the amount of subsidized student loans you take out. Once you have done this, supplement those funds with unsubsidized student loans to cover remaining costs of attendance.
The total amount in subsidized Stafford Loans that a dependent first-year student may receive is $3,500. That amount increases to $4,500 the following year, and remains at $5,500 for each year beyond that. The maximum amount allowed over the course of a college career is $23,000.
At most schools this doesn't even cover one year. Enter the unsubsidized loans.
For an independent student, the annual Stafford limits are roughly double the dependent figures. However, the amount that can be subsidized is equal to that of dependent students. In the end, an independent student may receive up to $46,000 in Federal Stafford Loans, though only $23,000 of that may be subsidized.
The simple fact is that neither will cover all of the expenses at most schools today, and must be in used in combination with each other and other forms of aid. It is in how you combine them that will either save or cost you more money. Take advantage of as much in subsidized college loans as you can to reduce your debt.
|Jennifer Mathes, Ph.D.|