To Sub or Unsub that is the question.


Most students in college are eligible for Federal Student Loans, this is good because without them the greater portion of us would not be able to attend. However, there are always risks when taking out loans no matter who they are from, therefore best to be in command from the beginning.

There are two types of loans offered through the FAFSA program. It always surprises me how many students of all age brackets do not know the difference between them. So here we are going to break it down, put it in everyday speech and hopefully get you going on a strong financial as well as academic foundation. They are the subsidize and the unsubsidized, look it is the government you should not expect a lot of thought into naming.

There will be those that understand how the loans work and fuss at my wording, but this is not to teach you banking structure and what the government pays or writes off for you. (If that is what you are looking for email us we will give you the correct link to that site.) It is a description of how it works from a student’s perspective.

Subsidized loans

Again, from the student’s perspective. These loans start needing repayment and accruing interest six months after finishing school. So basically, if you borrow $2000.00 when it comes time to pay it is still $2000.00. Of the two types of loans, this would be the one to make the most use of.

The FAFSA also provides for your Pell Grant, so in many cases, the grant and the subsidized loan will cover your whole tuition and books. If you want to keep your amount owed to a minimum, remember you do not have to accept the whole amount offered. You are in control, at this point and you can take only the amount you need. If you make a mistake and find out you should have taken more, then see your financial aid counselor, the amount is still accessible it is a matter of filling out the proper forms and a three to five day wait.

Unsubsidized loans

These are the bad boys, you should only take these if you have true need of the money. The day the money is issued to the school in your name interest starts to accrue! Yes, you do not have to pay while in school, and you have the same six-month grace period before payments start, like the subsidized. However, if you have not made any payments to offset the interest then at the start of your payments all that interest is folded into the loan and becomes part of your principle.

Even at the lower rate of 4.45%, it can add up quickly! A small $2500.00 loan at the beginning of your schooling gains $294.00 by the time comes to start paying. Remember you are probably still just starting out at this time and that extra money could be used for much better places.

Good News Bad News Good Tip

Each year, or maybe the next semester your loan award offers will increase. Here is another chance for you to dig that pit of debt that has started! Or stay in control again take only what you need. Here is a tip, and I have made use of this myself. Needed to take an unsubsidized loan, really 4.45% is a good interest rate for a car. (ssshhhhh) However, on the next semester, my subsidized loan was large enough that it paid my tuition and what was taken out of the unsubsidized the term before. That is right, use the subsidized to pay the unsubsidized! No interest is an even better car interest rate. (sshhh)

Think out of the box as much as you can, use what is put in front of you to YOUR advantage! No one else is going to take care of your finances but you.

Dedicated Student Security

For anyone truly serious about gaining an education without becoming buried in debt, please go to the foundation. That which needs to be done really before starting any tips, tricks, or life hacks. The one item that helps build successful habits. No matter how you feel about it, every self-made financial success uses a – Budget! Those born into wealth, that keep it and grow it larger uses – Budgets! Most people do not realize their life is truly their business and needs to be controlled and watched like one to have a prosperous outcome. Please go to – The “B” word – post and build the underlying structure of your secure life.

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