5
QuizMultiple Choice

Student Loans — Quiz

Question 5 • Financial Algebra/Mathematics

Which of the following is a benefit of subsidized (Stafford) loans?

Answer
A
Borrowing limits are higher compared to other loan types.
B
They are available for both undergraduate and graduate students.
C
Interest is paid by the US Department of Education while the student is in school and during deferment periods.
D
Interest accrues while the student is in school.

Explanation

With a subsidized Stafford loan, the U.S. Department of Education pays the interest while an eligible student is enrolled in school at least half-time and during qualifying deferment periods. This means interest does not accrue on the student’s loan during those periods. Choice A describes unsubsidized loans, where interest accrues while the student is in school.

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