What is Unsubsidized Loan?
Procuring an unsubsidized loan results in the borrower having to pay interest and principal on the borrowed sum from the time the loan is disbursed till the date of maturity. In some cases, the borrower may be allowed to defer interest payments. However the interest, that is deferred, accrues interest and the borrower becomes liable for a greater sum. Hence, it is never advisable to defer repayments on an unsubsidized loan since deferring interest on an unsubsidized loan means paying more interest. Difference between Subsidized and Unsubsidized Loans for Students • Both subsidized and unsubsidized Federal student loans are fixed interest rate loans. However, the interest that is charged on the former is less than the interest charged on the latter. • The interest on unsubsidized student loans is capitalized which is the same as saying that deferring repayments on subsidized loans results in the borrower having to pay interest, on the interest that accrues during the deferment period. T
Related Questions
- What if I have exhausted my annual Federal Direct Subsidized/Unsubsidized Loan eligibility and I still have not reached the cost of attendance? How do I secure additional loans?
- What is the main difference between a Subsidized and Unsubsidized Direct Loan?
- What is the difference between a subsidized loan and unsubsidized loan?
