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Subsidies come in various forms including: direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, accelerated depreciation, rent rebates).

The government subsidized some FHA programs, but the goal was to make it self-supporting based on borrowers' insurance premiums. Over time, private mortgage insurance (PMI) companies came into play. Now FHA primarily serves people who cannot afford a conventional down payment or do not qualify for PMI.

If you got your Direct Subsidized or Unsubsidized Loan on or after July 1, 2023, and before July 1, 2024, it will have a fixed interest rate after the payment pause ends: For undergraduate students, the interest rate for Direct Subsidized Loans and Direct Unsubsidized Loans is 5.50%.

If your loans are subsidized, you are not responsible for paying the interest that accrues while you're in school. If your loans are unsubsidized, you're responsible for all the interest that accrues, even while you're in school. Learn about the differences between subsidized and unsubsidized loans.

For example, if your subsidized loan is $5,000 at the start of your college education, it'll still be $5,000 when you begin paying it off after graduation because the government paid the interest on it while you were in school. The same may not be true for an unsubsidized loan.

Grantees may provide an interest rate subsidy to make the payments more affordable. For example, a bank may provide a couple with a home loan with a five percent interest rate. The grantee may subsidize it so that the interest rate changes from five percent to three percent, thereby lowering the mortgage payment.

Key Takeaways. A subsidy is a direct or indirect payment to individuals or firms, usually in the form of a cash payment from the government or a targeted tax cut. In economic theory, subsidies can be used to offset market failures and externalities to achieve greater economic efficiency.

Subsidies are payments, tax breaks, or other forms of economic support given by governments to certain industries or economic sectors. The goal of subsidies is to aid or support what are deemed to be key parts of the economy or national infrastructure.