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What Is a Subsidized Loan?

A subsidized loan is a kind of loan wherein the borrower does not have to pay interest. This does not mean that there is no interest applied on the loan, though. In the case of a subsidized loan, someone else takes on the responsibility for paying the interest on the loan. As with most things in life, though, there are certain requirements to be met before someone can apply for a loan subsidy.

The good news is that practically everyone can apply for a subsidized loan, as there are a lot of entities that offer loan subsidies, the government being the main one. More so, there are different kinds of loan subsidies that are meant to meet the needs of various people. What you need to do in order to avail of a subsidized loan is to make your needs clear first, and then look around for the source of your subsidized loan. Only then can you determine if you are going to be qualified for subsidy.

Perhaps the most common kind of subsidized loan is a student loan. The government grants subsidized student loans and pays the interest on the loans as long as the borrower is still in school. You will have to look at the requirements, though, as in many cases, the student will have to show proof of financial need. Students will also have to be enrolled at least half time. More so, there are certain grace periods wherein the subsidized loans are applied.

Another kind of subsidized loan is available for first time home buyers. In this case, subsidized loans are offered to those who are below a certain income level. Oftentimes, the location of the home being bought is also a major consideration.

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