Student loans are of two types
1. Subsidized Loan:
When it comes to them, you do not need to pay interest while you are studying in the college. When you are studying, interest is being paid by the federal government. But once your study completes and your grace period gets over, you need to repay your loan amount and interest. Grace period is normally is in the range of six months. These loans are based on the financial requirements of students. Best examples of these loans are Perkins Loan and the Stafford Loan.
2. Unsubsidized Loan:
When you opt for them, you need to pay interest even when you are studying at the college. Similar to above mentioned student loan; you will get a grace period of six months in terms of repaying the loan amount and interest.
Major Difference between the two:
The main point of difference between these two loans lies in the kind of loan amount that you can get. With subsidized loan, you cannot get a huge loan amount. It depends entirely on your financial condition and the objective behind you taking a loan. However, you can get a much bigger loan amount when loans are unsubsidized but the interest rates in these loans are normally quite high.
Loans that are subsidized are backed up by the federal government and educational institutions. This is not the case with their counterpart. Getting an approval for unsubsidized loan is lot easier. This is because of the simple reason that your credit score play a prominent part when it comes to getting an approval. If your score is low, there is a strong possibility that you will not get an approval for the loan. In an ideal scenario, make sure that you improve your credit score first before applying for these loans.
