31 Jul Understanding student loans and work/study

Q. What’s the difference between subsidized, unsubsidized and work/study money? My son was offered all three this year, but last year he wasn’t offered any. Why is that?
— Mom

A. Let’s first go over the different kinds of aid.

Work/Study is part-time work for students.

“There is a limit to how much you can work,” said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton. “The total amount you get is based upon three things: when you apply, your level of financial need and how much is approved for your school.”

Then there are the loans.

Subsidized loans are less expensive than unsubsidized loans, and they’re based on financial need, Lynch said.

“The U.S. Department of Education pays the interest while you are going to school at least half time and for the first six months after you graduate, and possibly during a period of deferment,” he said.

The unsubsidized loans generally have higher interest rates and you’re responsible for the interest from day one, Lynch said.

Bottom line? Subsidized is better.

As to why your son was offered different amounts, note that this can change every year. Perhaps your financial condition changed or you have another child in college, so what your son qualified for also changed.

Good luck!

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This post was first published in July 2017.