What is the difference between subsidized&unsubsidized loans?
Subsidized and unsubsidized loans exist in almost every sector of the lending industry. The main difference between subsidized and unsubsidized loans is that a third party agrees to pay for a portion of a subsidized loan as well as guarantee repayment to the lender, meaning that if the borrower defaults on the loan, the third party will repay the loan. The most notable examples are student loans. Many students receive a loan as part of their financial aid package. These loans are either subsidized or unsubsidized.Need BasedMost subsidized loans are need based. This means that the loan is offered to individuals that meet a certain income threshold. This threshold will vary from lender to lender and from loan product to loan product. Unsubsidized loans are available to anyone that applies, based on the availability of funds.Interest SubsidySubsidized loans will generally not accrue interest until the repayment period commences. This is because the subsidizing party, usually the federal g
