What’s the difference between subsidized and unsubsidized loans?
With subsidized (need-based) loans, the federal government pays the interest that accrues when you are enrolled at half-time level or higher in qualified courses, during your grace period, or during authorized deferment periods. With unsubsidized (non need-based) loans you, the borrower, are responsible for payment of interest while attending school, during your grace period, and during authorized deferment periods. Capitalization occurs if you choose not to pay the interest that is accruing on an unsubsidized loan during such periods. When capitalizing, the unpaid interest is added to the loan principal, increasing your total outstanding balance.
When we get the results of your FAFSA, we’ll tell you if you qualify for a subsidized loan. Subsidized loans usually charge lower interest than unsubsidized loans. We decide if you qualify for a subsidized loan based on your FAFSA answers. The federal government pays the interest on a Subsidized Loan while you are in school at least half-time and during periods of grace and deferment. You can qualify for an Unsubsidized Loan regardless of financial need, but then you’ll pay all interest charges.
You want subsidized. A subsidized loan is one where the government pays (subsidizes) the interest on your loan while you’re in school, for the first six months after you leave school, and if you qualify to have your payments deferred. With an unsubsidized loan you are responsible for the interest from the time the unsubsidized loan is disbursed until it’s paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increase the amount you have to repay. Lots more information about federal stafford subsidized, and unsubsidized, loans can be found here: http://studentaid.ed.gov/PORTALSWebApp/s… I’m assuming you are a freshman, and you are dependent. If so, the most you can get in subsidized is 3500. You can’t get 5500 in subsidized loans because of the rule
Subsidized loans: The government pays (subsidizes) the interest on the loan while the student is in school at least half time, for the first six months after the student leaves school, and if the student qualifies to have payments deferred. • Federal Perkins Loan • Federal Direct Subsidized Stafford Loan Unsubsidized loans: The student or parent pays the interest on the loan from the time it is disbursed until it’s paid in full.
