What is the difference between a subsidized and unsubsidized Federal Stafford Loan?
• “Subsidized” means that the fixed interest on your federal Stafford Loan will be paid by the federal government during your enrollment (here and during graduate school, if you go on). • “Unsubsidized” means that the fixed interest will be your responsibility during your enrollment. The interest can be paid to your lender while you are enrolled or can accrue during your enrollment and not paid until after you leave school.
• “Subsidized” means that the 6% fixed interest on your federal Stafford Loan will be paid by the federal government during your enrollment (here and during graduate school, if you go on). • “Unsubsidized” means that the 6.8% fixed interest will be your responsibility during your enrollment. The interest can be paid to your lender while you are enrolled or can accrue during your enrollment and not paid until after you leave school.
If you demonstrate financial need on the FAFSA, you will be eligible for a Subsidized Loan. If not, you will be eligible for an Unsubsidized Loan. The federal government pays the interest that accrues on a Subsidized Loan while you are in school and in your grace period prior to repayment. For the Unsubsidized Loan, you are responsible for paying the interest quarterly or capitalizing it to your principal loan balance. If it is affordable for you, the financial aid counselors recommend paying the interest as it accumulates. In this way, you will only owe the principal loan balance when you enter repayment and will not have any accumulated interest.
Related Questions
- What is the difference between the Subsidized Federal Direct Stafford Loan and Unsubsidized Federal Direct Stafford Loan?
- What is the difference between a Subsidized Federal Stafford Loan and an Unsubsidized Federal Stafford Loan?
- What is the difference between Federal Subsidized Stafford Loan and Federal Unsubsidized Stafford Loan?
