What are Unsubsidized Loans for College?
To have a better appreciation of the reforms on student loans in college, we will first satisfy queries regarding information about unsubsidized loans for college.
In as much as free college money to meet the entire cost of attending college was often insufficient; most students resorted to Stafford loans to cover their unmet financial needs as a means of completing their college education. Stafford Loans were considered better alternatives to private or alternative loans because the repayment of these loans could be deferred until after the student graduated or after he withdrew from this loan program, with a 6-months grace period.
The students borrow the amount needed to cover their unmet financial needs, and this amount is subsidized by the federal government, and serviced by private banks or private financial institutions. As a subsidized loan, all the interests accruing to the loan while under deferment will be paid by the federal government to the privately owned service providers.
In addition, the student may borrow not for financial need and will be granted as an unsubsidized loan. This means all interests accruing to this portion of the student’s loan will be added to the total amount of deferred loan to be paid by the student, 6 months after his graduation from college.
However, due to the recent economic downtrend, most of the students preferred not to enter college anymore due to the high costs of education. Despite the availability of subsidized and unsubsidized loans, parents and student were wary of the economic impact of the loans they will have to pay after graduation. On top of that, there was also the uncertainty of even landing a job within the 6-months grace period.