The Subsidized loan and where it comes from.

A subsidized loan is loan made to those who can fulfill the criteria for financial need. As long as the student is enrolled at least half-time in either and undergraduate or graduate program, then the interest on the loan is paid off by the government, until you start repaying back your loan and then you are charged interest. The Federal Subsidized Loan is federally sponsored and available at most schools for students who are attending college through a program called the Federal Family Educational Loan Program (FFELP). A bank, credit union, or saving and loan association can make the loan. A guarantor, a state agency or a non-profit cooperation will ensure the loan. So that you can make the loan just on your signature alone.

Getting a subsidized loan

A Federal Stafford Subsidized loan is awarded based on financial need. Eligibility is determined in the analysis of the submitted Free Application for Federal Student Aid (FASFA) data and by the school. The school will offer you the loan in an award letter if you qualify. Federal Subsidized loans have an annual maximum limit that may vary depending on your year in school and also whether you are classified as a dependent or independent student by definition of the program. To obtain a loan you must first fill out the FAFSA form, if you school offers and you accept the loan, you will than receive a Master Promissory Note that must be signed and returned. Your loan will either be electronically transferred to the school's bank account or to your student account. Or a paper check will be made payable you and the school you have chosen.

Some Basics

The interest rate on a Federal Subsidized Loan cannot exceed 8.25 percent, and the interest rate will vary annually and is adjusted usually in July of each year.
Sometimes you are required to pay an origination fee up to 3% of the principal balance. This will be deducted though from the loan disbursement you receive which is paid by the Department of Education. You're interest is building while you are in school, but the taxpayers are paying the interest. Sometimes you have up to 10 years to pay off a loan, but you start 6 months after graduating college.