Students who require financial assistance to carry on with their college education can easily get a hold of various types of student loans. However, the loan keeps on producing interest until it is paid back which means that the amount paid in the end by the student will be a lot bigger than what was borrowed due to the increased interest on it. Now, the interest rate depends on what type of loan the student borrows. Usually most of the students go for Federal Stafford Loans or Federal Perkins Loans. Perkins loans carry the lowest interest rate; however, these loans are only given to students who can show that they are more need compared to other applicants of this loan. Stafford loans on the other hand are easier to get and can be bigger depending on your course of studies. However, they too carry a high APR interest rate.
Interest keeps on adding up to your loan amount until the day it is entirely paid back. However, there are some students who actually can get subsidized student loans. In these loans, depending on certain factors, the interest amount over the loan is paid off on behalf of the student.
Both Stafford and Perkin Loans can be easily subsidized by the student if he or she can prove to have more financial need compared to the other students who have applied for the same loan. If the student qualifies, the loan will get subsidized meaning that he or she will no longer have to pay any interest over the borrowed loan amount.
It all happens because student loans work in a way that once the student graduates, he or she will get a job after which the loan will be paid back. The interest amount is subsidized for only the time that you are in college and during the grace period as well that is 6 to 9 months for the both the types of federal student loans. Other than these times, the interest will be charged if you fail to get a job. However, if you get the deferral approved; the interest will again be waived off for that time period as well. Deferral can be approved by proving that you worked hard during the grace period to get a job but you cannot get one. If you started your job and lost it somehow, you can still get a deferral and get your student loan subsidized for the left up interest.