What is the difference between a subsidized and an unsubsidized Federal Stafford loan?
A subsidized loan is awarded on the basis of financial need. The federal government pays the interest on the loan during the time you are enrolled in college and during the period in which your loan is deferred. An unsubsidized loan is not awarded on the basis of financial need, and you are charged interest form the time the loan is disbursed until it is paid in full.
• The subsidized Stafford loan is interest-free while the student is enrolled at least halftime. • The unsubsidized Stafford loan has the interest accruing from the time the loan is disbursed. • Both loans can be deferred while a student is enrolled at least halftime and both assume a standard repayment period of 10 years once a student is no longer enrolled at least halftime.
A Subsidized Stafford Loan is a federal loan awarded to students who demonstrate financial need as a result of filing the FAFSA. Maximum amounts available per student are set by the federal government and are based on the student’s grade level classification at the institution. The government pays the interest on the Subsidized Stafford loan while the student is in school, and the student begins repaying the principal of the loan 6 months after graduation or ceasing at least half-time enrollment. The Unsubsidized Stafford Loan is identical to the Subsidized Stafford in terms of annual maximum amounts, interest rates, and application process. The only difference is that interest on the Unsubsidized Stafford is not paid by the government while the student is enrolled. The student has the choice to either make interest payments while enrolled or defer the interest until repayment of the principa1 begins.
Subsidized Stafford Loan is a federal loan awarded to students who demonstrate financial need as a result of filing the FAFSA. Maximum amounts available per student are set by the federal government and are based on the student’s grade level classification at the institution. The government pays the interest on the Subsidized Stafford Loan while the student is in school, and the student begins repaying the principal interest of the loan 6 months after graduation or ceasing at least half-time enrollment. Unsubsidized Stafford Loan is identical to the Subsidized Stafford in terms of interest rates and application process. The only difference is that interest on the Unsubsidized Stafford is not paid by the government while the student is enrolled. The student has the choice to either make interest payments while enrolled or defer the interest until repayment of the principal begins.
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