Boston Bankruptcy Attorney

Federal Unsubsidized Loan

Unsubsidized federal loans are the opposite of subsidized loans. Federal subsidized loans are available to low-income individuals. These loans are special because the interest that accrues while the student is in school is covered by the government. This means that when the student gets out of school, he or she must work to pay down the principal and any interest that accrues after the 6 month grace period ends.

Federal unsubsidized loans, on the other hand, have their interest accrue while the student is in school. In theory, the student must start paying interest back immediately. The majority of students get around this by deferring the interest on the loan. This interest is then capitalized as part of the balance. Once the six-month post graduation grace period ends, the student picks up all of the payments.

The unsubsidized Stafford loans are the most common form of loan in the United States. More students carry this type of loan than any other type. While the subsidized student loans are easily the best deal, the majority of students fall into the category of unsubsidized loans. These loans include Perkins Loans, PLUS loans for parents of undergraduate students or for graduate students, and unsubsidized Stafford loans.

In some cases, the unsubsidized loans are not enough to cover the costs of college. In these instances, students frequently turn to private and alternative student loans. On all of these loans, the interest while in school becomes the responsibility of the borrower.

Contact a Boston Bankruptcy Lawyer

Unfortunately, student loans cannot be discharged in bankruptcy. If you are facing a dire financial situation because the monthly payments you owe on a house, car, or medical bills are too much, contact the Boston bankruptcy attorney of Joshua Spirn & Associates at 1-800-975-5346 to discuss your legal options.