fold faq What is the difference between subsidized and unsubsidized Stafford Loans?
A subsidized loan is based on financial need. The federal government will pay the interest on a subsidized loan through your enrollment period in school and through the grace period. An unsubsidized loan is not based on financial need. You must either pay the interest monthly/quarterly, or have the interest capitalized (added to the principal loan amount). Repayment of the interest and principle begins six months after you graduate, leave school, or drop below half-time enrollment. The interest rate is 6 percent for loans first disbursed July 1, 2008 to July 1, 2009.
