What are government subsidized student loans in the U.S.? Are they available for international students?

Student Loans play a huge role in the US higher education, as majority of Americans and international students rely on student loans to help cover the cost of education. Student loan debt in the U.S. has been growing rapidly since 2006, rising to nearly $1.4 trillion by late 2016, roughly 7.5% GDP (Source : https://en.wikipedia.org/wiki/Student_loans_in_the_United_States)

Student loans in the U.S. can be largely divided into federal loans and private student loans. As the name suggests, private student loans are loans from private lenders, whereas federal loans are government loans.

Federal loans can be further segregated into government subsidized loans and government unsubsidized loans.

Government Direct Subsidized Loans, also called Subsidized Stafford Loans, are federal student loans that offer undergraduate students a low, fixed interest rate and flexible repayment terms, for students who demonstrate financial need. Here, the federal government pays the interest when you are in school at least half-time, during the grace period, and during periods of authorized deferment.

Government Direct Subsidized Loans are the best kind of student loans available, the second best option being Direct Unsubsidized Loans. Both subsidized and unsubsidized loans are guaranteed by the U.S. Department of Education either directly or through guaranty agencies.

Government Loans in the U.S.

The U.S. Department of Education offers two types of government/ federal loan programs-

• Federal Direct Loan Program- The William D. Ford Federal Direct Loan is the largest federal student loan program, where the government lends directly to the students. There are four types of direct loans available-
• • Direct Subsidized Loan- Government Subsidized loans made to eligible undergraduate students from financially weaker section of the society to help cover the cost of higher education in the US.

• • Direct Unsubsidized Loan– Government loans made to eligible undergraduate, graduate, and professional students to help cover the cost of higher education in the US.

• • Direct PLUS Loan– Government loans made to graduate or professional students and parents of dependent undergraduate students to help pay for education expenses not covered by other financial aid.

• • Direct Consolidation Loan– Government refinancing student loan to combine all of your eligible federal student loans into a single loan with a single loan servicer.

• Federal Perkins Loan Program– Low interest government student loan, a school-based loan program for undergraduates and graduate students with exceptional financial need. Under this program, the school is lender.

Government Subsidized Loans in the U.S.

As stated above, government direct subsidized loans or stafford loans are subsidized loans from the U.S. Department of Education, for eligible undergraduate students. These loans have better terms than most student loans, to help students with financial needs.

Eligibility

• Undergraduate student.
• Have demonstrated financial need as determined by the FAFSA.
• U.S. citizen, national, or eligible non-citizen.
• Have received a high school diploma or the equivalent (e.g., GED).
• Enrolled at least half time in an eligible degree or certificate program.
• Not in default on any existing federal student loans.
• Meet general eligibility requirements for federal student aid.

Features

• Direct Subsidized Loans are available to undergraduate students with financial need.
• After you file the Free Application for Federal Student Aid (FAFSA) , your school’s financial aid office will use that information to determine your eligibility and the amount you may borrow.
• Your school determines the amount you can borrow, and the amount may not exceed your financial need.
• The U.S. Department of Education pays the interest on a Direct Subsidized Loan
  • while you’re in school at least half-time,
  • for the first six months after you leave school (referred to as a grace period), and
  • during a period of deferment (a postponement of loan payments).

Benefits

• • Fixed interest rate of 4.45% for the 2017-2018 academic year.
  • Eligibility is based on demonstrated financial need, as determined by the FAFSA.
  • The federal government pays the interest when you are in school at least half-time, during the grace period, and during periods of authorized deferment.

• No payments while you are enrolled in school at least half time.
• Multiple repayment plans (including income-based) available.

Are Government Subsidized student loans available for international students?

Even though the U.S. Department of Education states that eligible non-citizens are a candidate for subsidized loans (as per the eligibility criteria), it is very difficult, next to impossible for an international student to prove exceptional financial need in the U.S. Therefore, it is not an option for most international students.

In fact, there are very few student loan choices available for international students in the US, as there are only a handful of private lenders lending to the international students in the U.S., due to lack of credit history and temporary visa status. Some of the lenders being, Prodigy Finance, Mpower Finance, Westbon and Stilt Inc– providing loans to international students and immigrants in the US.

About Stilt:

Stilt provides loans to international students and working professionals in the U.S. (F-1, OPT, H-1B, O-1, L-1, TN visa holders) at rates lower than any other lender. Stilt is committed to helping immigrants build a better financial future.

We take a holistic underwriting approach to determine your interest rates and make sure you get the lowest rate possible.

Learn what others are saying about us on Google, Yelp, and Facebook or visit us at https://stilt.com. If you have any questions, send us an email at team@34.82.110.37.

Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.

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