What is the difference between a subsidized and unsubsidized student loan?
The federal government pays the interest for the student during the student’s enrollment, during the grace period and through any deferments the borrower qualifies for if the student has a subsidized loan. If the student’s loans are unsubsidized the student is responsible for the interest during school, the student’s grace period and any deferments.
A subsidized Stafford student loan is interest free while you are enrolled in school at least half time. You also have a six month grace period once you graduate or stop attending school, before you begin repaying the loan. The unsubsidized Stafford student loan begins to accrue interest at the time the loan is disbursed. Unless you make the quarterly interest payments, the interest will capitalize which will cause your loan payments to be larger once you begin to repay your loan. For more information, refer to the Federal Student Guide.
