How does the government keep federal subsidized student aid interest rates lower then other loan types?
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With the infusion of federal funds from taxes, used to guarantee the repayment of the loan, even if the individual borrower should prove unable to do so. With the loan essentially guaranteed, the lender is able to accept a lower rate of interest.
Best the loan is basically from the government. Just like the new loans for new home buyers.
the U.S. Department of education pays for the interest that accrues on subsidized loans while the student is enrolled at least half-time and during periods of deferment. meaning the governments pays the interest off making sure that the interest doesn’t go up while your in school but it is only on subsidized loans not other loans like PLUS loans.