Which statement BEST describes a subsidized Stafford loan?

Which statement BEST describes a subsidized Stafford loan?

• A. The government cosigns and you pay no interest while in school
• B. Interest accrues from disbursement and must be paid immediately
• C. It is available only to foreign students
• D. It has no fixed interest rate

Answer: (A)

Subsidized Stafford loans are federal loans where the government covers the interest during times when you’re not required to pay it yourself—specifically while you’re in school at least half-time, during grace periods, and during deferment. This means you don’t pay interest while you’re a student, and the government pays it for you. There’s no cosigner required for these loans—the government is the lender. The other statements don’t fit because interest isn’t paid by you during school, these loans aren’t limited to foreign students, and federal loans have fixed interest rates. The key idea is that the government covers the interest during qualifying periods, reducing your borrowing cost while you study.

Subsidized Stafford loans are federal loans where the government covers the interest during times when you’re not required to pay it yourself—specifically while you’re in school at least half-time, during grace periods, and during deferment. This means you don’t pay interest while you’re a student, and the government pays it for you. There’s no cosigner required for these loans—the government is the lender. The other statements don’t fit because interest isn’t paid by you during school, these loans aren’t limited to foreign students, and federal loans have fixed interest rates. The key idea is that the government covers the interest during qualifying periods, reducing your borrowing cost while you study.