<ol>
<li>Is Federal Subsidized Direct Loan a loan without interest? </li>
<li>What does it mean to convert Loans to Work-Study?</li>
<li>What does it mean to convert Work-Study to Loans?</li>
</ol>
<p>A subsidized loan is one where the government pays the interest while you’re in school…so there is interest added later on, but only after you graduate/become less than a half-time student. The advantage is that it’s not compounding, or requiring you to pay the interest portion to avoid compounding, while you’re a student. For loans issued between 7/1/10-6/30/11, the rate of interest will be 4.5% after it starts accruing.</p>
<p>I think your 2&3 mean to take more loans in lieu of work study or less work study in favor of loans. Option 2, if the school is offering work study, would allow you to borrow less, provided you could find a work study job with enough hours to make the substitution. Option 3 would result in higher loans but may be more realistic if the school is offering a very high work study (say $4K/year) award or your academic schedule is such that few work study jobs/hours are available during your free time.</p>
<p>Work-study means that a part of your salary comes from the government aid. So let us say the wage is $10 per hour and you have a work study package of $2500, you have to work 250 hours in a say 9 month period or about 28 hours a month. (These numbers are made up, actual aid package will vary and so will the wages). Of the $10 the employer (say dining services) pays you , they may pay 25% of that wage and the remaining 75% comes from government grants. So you are very attractive to the employer as they pay only a part of your wage i.e. they pay only $2.50 per hour and $7.5 per hour is given to them as part of the package.</p>
<p>Now you may come back and say, I can work more than 28 hours a month (7 hours a week), I can easily do 10 hours a week or even 15 hours a week. So why don’t I work a little bit more and take less in loans. So if I work 10 hours a week, I can make $10<em>10</em>4*9 or $3600 a year instead of $2500 and so I have less loans. You may want to get aggressive and decide you want to work 12 hours or 15 hours. But now there are several catches.</p>
<p>1) Jobs, especially those that pay well may not be easy to find. You have to find the job, the school may help but they do not give you a job. Some jobs may be just minimum wage. Upperclassman usually know the best jobs. As sk8rmom, they may not fit your schedule.</p>
<p>2) Your schedule may not permit a lot of outside work. You may not be able to work so much and yet keep up your grades. Remember, the primary purpose is education and you have to keep your grades.</p>
<p>3) There is a limit to how much the government will subsidize you. As I mentioned earlier, let us say the employer pays you $10, the government (through the school) will pay the employer $7.50. But this caps out at $4000 (may be $4500, not sure). So if you work 15 hours a week, this subsidy may be for only 10 hours a week and for the remaining 5 hours, the employer has to pay full wage. The employer might decide it is better for him to have 2 students that work 7.5 hours (as each will get a subsidy) than one student working for 15 hours.</p>
<p>So yes, you can work a little more and take less loans or work a little less and take more loans as sk8rmom has pointed out. But there is a limit to how much you can go either way. Less the loans the better. Hope this helps.</p>