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There are literally hundreds of scholarships, grants and loan programs available to college students today but, for the vast majority of students, at least some part of their funding will come from a federal student loan program.

There are a number of different federal student loan programs, including the Stafford loan program which is aimed at students and the PLUS loan program which is aimed at parents and graduate students, but within those programs which are aimed at students there are two main categories of loan which it is vital to understand and these are subsidized and unsubsidized loans.

Both subsidized and unsubsidized loans are similar in the sense that students will not need to make repayments on their loans while they are attending college and payments will not usually start until six months after they have graduated. However, when it comes to the amount of money which students will have to repay these two categories of loans are very different.

In the case of subsidized loans interest is charged to the loan from the date on which the loan is paid but, while the student is attending college and for the grace period between gradation and the date on which the students starts to make repayments, the government pays the interest due.

By contrast, unsubsidized loans again accrue interest from the day on which the loan is paid but, instead of being paid by the government, this interest is added to the loan to eventually be paid by the student when he or she starts making repayments some six months after graduation.

Interest on an unsubsidized loan is calculated on a monthly basis and even at very low interest rates can build quite quickly. For example, a loan will attract higher and higher interest charges each month as each interest charge is added to the loan and itself becomes subject to interest payments. Given therefore that most students will be taking out several loans over the course of their time at college and will not normally start repaying these for three and a half years or more this can increase considerably the amount of debt you have, over and above the sum which you have actually borrowed.

From this it will be seen that wherever possible you should always try to get a subsidized loan first and then top this up with unsubsidized loans if necessary. This said, it is not quite as easy as you might think and you will need to satisfy the requirements for the various different types of loan and then apply using the standard FAFSA application form in the normal way to see whether or not you can get the loan you want. Most student will however find that it is possible to get a Stafford college loan and indeed many will also qualify for other forms of federal loan assistance.

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