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What is the difference between a Federal Direct Stafford Loan and a Federal Direct Unsubsidized Stafford Loan? Which should I choose?

April 26, 2017difference Federal loan Stafford Unsubsidized

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What is the difference between a Federal Direct Stafford Loan and a Federal Direct Unsubsidized Stafford Loan? Which should I choose?

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Under federal law, you must receive all of the Federal Stafford loan you are eligible for before you may receive any Federal Direct Unsubsidized loan. Both loans are similar, but technically the Unsubsidized becomes due and payable while you are still in school. This repayment is automatically deferred until after you are no longer enrolled, but because some interest payments were due while you were in college, having been set aside until you are not enrolled, some interest is added to your loan making it a little more expensive than the Federal Direct Stafford loan. This is called ‘capitalized interest’.