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What is the difference between an Unsubsidized Stafford Loan and a Subsidized Stafford Loan?

April 26, 2017loan Stafford Subsidized Unsubsidized

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What is the difference between an Unsubsidized Stafford Loan and a Subsidized Stafford Loan?

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For Subsidized Stafford Loans, the federal government pays the interest on the loan as long as the student is enrolled at least half-time and through the 6 month grace period after the student is no longer enrolled at least half-time. With Unsubsidized Stafford Loans, the interest accrues during the time the student is enrolled at least half-time in school and through the 6 month grace period. The accrued interest is then added to the loan amount when repayment begins.

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With a subsidized Stafford loan, the government pays interest on the loan until you graduate from college. There is no credit check to qualify for a subsidized Stafford loan; however, you must demonstrate financial need. An unsubsidized Stafford loan still offers the same low interest rate as the subsidized Stafford loan, but the student will have to pay the interest on the loan from the date of origination, or while in school.