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Subsidized Loans Basics

If you are looking for a loan, which will charge you no interest, then you should direct your attention to subsidized loans. Under the conditions of traditional loans, in accordance to the APR (annual percentage rate) interest will be charged over specific time periods. On the other hand, a third party pays the interest on the subsidized loan.

The subsidizer of the loan depends on its type. It can be:

  • An organization
  • A charity
  • The government
  • Others

For example, if you are a student still doing your studies and have a subsidized Stafford Loan, then the government will be responsible for paying the interest.

Subsidized and unsubsidized loans can be used during one and the same year.

Subsidized Loans Eligibility

Different subsidized loan providers have different eligibility requirements. For example, if you apply for a home loan, you may face such requirements as living in a particular location or having a particular amount of income.

On the other hand, if you apply for a student loan you will have to show that you have a financial need. As sources of information your income and other resources will be used. These will be used for making a comparison with the cost of attending the target school and determining your eligibility.

There other eligibility requirements that should be met in order to obtain such a subsidized loan. Some of them include:

  • You should be enrolled in the school at least half-time
  • You should be during a grace period
  • You should be during a particular deferment period

If you fail to meet these requirements, you will be subject to interest.

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