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Which of the following is true of a subsidized student loan?

A. You do not have to repay the loan until after you have earned your first $250,000 following graduation.
B. If you maintain a high grade-point average, you do not have to repay the loan
C. The interest rate on a subsidized student loan is higher than on a conventional bank loan.
D. Interest is not charged until after you graduate.

1 Answer

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Final answer:

The true statement about a subsidized student loan is that interest is not charged until after graduation, making higher education more affordable. As the student loan debt increases, the importance of such benefits grows for students entering the workforce.

Step-by-step explanation:

Among the options given regarding a subsidized student loan, the correct statement is that interest is not charged until after you graduate. This means during your time in school and often during a grace period after graduation, the government covers the interest on the loan. This is a key feature designed to make education more affordable for students while they are not in a position to repay the loan due to low or non-existent income.

Subsidized student loans are intended to help students manage the costs of higher education at a time when college tuition continues to increase and the burden of student loan debt has surpassed the $1 trillion mark. Although interest rates on student loans were lowered through efforts such as the compromise worked out by the Obama administration in 2013, the challenge of repaying debt remains significant for graduates as they begin their careers often at entry-level wages.

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