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What is the difference between Subsidized and Unsubsidized Stafford loan?

April 26, 2017loan Stafford Subsidized Unsubsidized

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What is the difference between Subsidized and Unsubsidized Stafford loan?

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Subsidized is a need-based loan. The federal government pays the interest on the loan while the student is in school and during the six month grace period. Unsubsidized is a non-need based loan. Interest starts immediately on the loan once it is disbursed to the school. You may pay interest while you are in school or capitalize your interest and pay nothing until six months after you cease attendance.

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8. Interest does not accrue on a subsidized Stafford loan while a student is in school but it does on an unsubsidized Stafford loan. The amount of funding a student may be eligible for will be different for each.