What is the difference between a Subsidized and Unsubsidized Federal Direct Loan?
If you are eligible for and take out a Subsidized Federal Direct Loan, the federal government will pay the interest for you while you are in school and up to six months after you cease to be student(at least half-time), at which time you will need to begin repaying the loan. If you are eligible for and take out an Unsubsidized Federal Direct Loan, you are responsible for all the interest that accumulates. You will have the option of either paying the interest as it accumulates or capitalizing the interest (adding it to the principal balance). If you choose to pay the interest back as it accumulates you will pay less in interest overall. Like a Subsidized loan, you will have to begin payment six-months after you cease to be a student (at least half-time).
