What is the difference between a subsidized and unsubsidized Stafford Loan?
The Federal government pays the interest on subsidized loans while the student is enrolled in school for at least half-time. With an unsubsidized loan, the interest payments are the responsibility of the student. Students can elect to pay the interest on the unsubsidized loan while in school or can choose to let the interest accrue. Arrangements for payment should be made through the student’s lender, not the school.
If you are eligible for and take out a subsidized Stafford 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 Stafford 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). • How will financial aid credit the student account? If a student is registered for classes at DWU this is an automatic, computerized process once he/she has completed the financial aid process. All Federal, State and DWU grants and scholarships,
The subsidized Stafford loan is a form of need-based aid that is awarded only to students whose calculated EFC scores indicate that they and their family demonstrate “exceptional need”. A student can not “apply” for a subsidized Stafford loan – but if you qualify, you will be offered a subsidized loan by the financial aid office, as part of your aid offer package. Most students who qualify for a subsidized loan are offered both the subsidized loan and an additional unsubsidized loan, as well. The difference between the two is in the treatment of the interest that accrues on the loan while you are in school – and during the 6 month grace period after you leave school – before your payment obligation kicks in. Students who receive a subsidized Stafford loan have all of the interest payments picked up and paid for by the federal government until their repayment period begins. Depending on the amount of money borrowed, this could save the borrower a few thousand dollars. Remember – this be
Subsidized Stafford Loans are awarded based on financial need. You will not be charged interest before you begin repayment or during periods of deferment. The federal government “subsidizes” the interest during these times. Unsubsidized Stafford Loans are not awarded based on financial need. Any eligible student can take out unsubsidized Stafford loans. You will be charged interest from the time the loan is disbursed to the time the loan is repaid in full.
