What is the difference between subsidized and unsubsidized Stafford loans?
The federal government provides two types of Stafford Loans to students to assist them in paying their educational expenses. One type, Subsidized Stafford Loan is a need-based loan determined by the FAFSA. The federal government guarantees this loan and no interest accrues and no payments are made, until after the student completes his/her program.The other type is a Unsubsidized Stafford Loan which is a non-need based loan. Interest does accrue on this loan while the student is enrolled, but no payments are made until after the student completes his/her degree.
Subsidized Stafford Loans are for students with financial need. The federal government pays the interest while you are enrolled at least half-time AND during your six-month grace period after leaving school. Unsubsidized Stafford Loans are for qualified students regardless of income or assets. You are responsible for any interest accrued from the date the loan is disbursed to when the loan is repaid.
Subsidized loans: Interest accrued is paid by the federal government while students are enrolled at least half-time (6 units) and during a 6 month grace period. Unsubsidized loans: Students are responsible to pay all interest accrued for the life of the loan; the interest accrued is capitalized at repayment (students can choose to pay interest while in school to prevent it from capitalizing).
For subsidized loans, the government pays the interest while the loan holder is enrolled at least half-time in an institution of higher education. For unsubsidized loans, the loan holder is responsible for paying all interest that accrues after disbursement. Unsubsidized loan holders have the option of capitalizing the interest during the in-school and deferment periods, or paying the interest monthly. • When does repayment begin for Stafford Loans? Repayment begins six months after completion of the degree program or after dropping to less than halftime enrollment status. • How are Stafford Loans credited to my account? Stafford funds are disbursed in two equal payments, one payment per semester. Full-time and part-time M.B.A. students generally receive equal payments in fall and spring. • When will my Stafford Loan be credited to my account? The pending Stafford Loan will be posted as a credit to your account as soon as your eligibility has been determined, generally two to three wee
