Whats the difference between subsidized and unsubsidized student loans?
“Subsidized” loans are based on having remaining Financial Need (See Question #15). The U.S. Government subsidizes (i.e. “pays for”) your loan interest while you are enrolled in school at least half-time and during “Grace periods” and approved “Deferment periods” (payment postponements). “Unsubsidized” student loans are not need-based, and the student or parent borrower (not the government) is responsible for paying all accrued interest from the time the loan is first disbursed until the time the loan is paid off in full. Borrowers who allow the interest to accumulate (capitalize) have to pay interest not only on the original amount borrowed (the principal), but on the principal plus all the accumulated interest. Therefore in the long run, the loan may end up costing the borrower several times more than the original amount borrowed! Students should consider borrowing loans only if they are very serious about completing their education and they truly need the loan funds in order to do s
