What’s the difference between a subsidized loan and an unsubsidized loan?
A subsidized loan is awarded on the basis of financial need. If you qualify for a subsidized loan, the federal government pays interest on the loan until you begin repayment. An unsubsidized loan is not awarded on the basis of need. If you qualify for an unsubsidized loan, you will be charged interest from the time the loan is disbursed until it is paid in full. You can choose to pay the interest or allow it to accumulate. If you allow the interest to accumulate, it will be capitalized–that is, the interest will be added to the principal amount of your loan and will increase the amount you have to repay. If you pay the interest as it accumulates, you will repay less in the long run.
