Subsidized loans are a type of federal student loan that is available to undergraduate students who demonstrate financial need.
These loans have a fixed interest rate that is set by the government, and the government pays the interest on the loan while the borrower is in school.
This means that while the borrower is in school, interest does not accrue on the loan.
The government pays the interest on subsidized loans by using taxpayer funds.
This is an investment in the future of the country, as it helps to ensure that students from low-income families have access to higher education.
By paying the interest on subsidized loans while the borrower is in school, the government is helping to reduce the overall cost of borrowing and make higher education more affordable.
It’s important to note that not all federal student loans are subsidized.
There are also unsubsidized loans, which are available to both undergraduate and graduate students.