College is such a large investment that the majority of the students run out of money somewhere in their education. It has been reported by Fannie Mae that two thirds of the college students, at some time or another during their college education, need to take out undergraduate student loans so they can continue to study.

If you have to take out a loan, the easiest and cheapest loans to apply for are the federal Stafford loans. There are two types of Stafford loans for undergraduates, the subsidized and the unsubsidized. You have to prove you have a financial need in order to receive the subsidized loan, while that isn’t necessary on the unsubsidized loan.

According to staffordloan.com being a US citizen or permanent resident, being able to show high school completion or a GED test, attending an approved university at least half-time, having no deferments on any outstanding federal loans and possessing a FAFSA pin number are all requirements for a student to apply for a subsidized Stafford loan. He must also be able to show he has a financial need.

Once your subsidized Stafford loan is approved, you won’t have to worry about making payments or paying interest until six months after you receive your degree. They don’t require a credit check, and you won’t have to pay high interest rates.

The differences between the unsubsidized and the subsidized Stafford loans are minimal. Anyone can apply for an unsubsidized loan regardless of their financial need. Even though the loan company begins to charge interest immediately upon disbursement of the money, making it the most expensive type of federal loan, no one is obligated to make monthly payments while they are still in school.

Did you know that you can apply for $2, 000 more with an unsubsidized Stafford loan than you can with a subsidized one? Since interest accrues every month on the unsubsidized loan while you are still in school, it will be necessary to choose between these two options. Either pay off the interest you are charged every month while you are going to college, or have it added to the loan principle when you begin to repay it. The disadvantage to the second option is that you will pay more in interest.

When you run into financial problems while you are in college, do everything you can to get free money. Once you have exhausted all of the resources for free money, apply for a subsidized or unsubsidized federal Stafford loan. The type of undergraduate student loans you choose will depend mostly on your financial condition.

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