Question

Eligibility for a subsidized Stafford loan is based on current financial need. However, both subsidized and unsubsidized Stafford loans are repaid out of future income. Given this, do you see a possible objection to having two types?

Answer 1

Stafford loan is mainly given to the students. Every one is not eligible for subsidized loan where interest is paid by the government. But in case of unsubsidized loan, interest is paid by the loan borrower. Though payment is based on the future income but the required amount paid in both cases are different due to interest accumulated during the time. Thus there is no objection having two kind of loans since the loan criteria is different for both type of student loans.