Unsubsidized vs Subsidized
- Unsubsidized Loans start accruing interest immediately, and Subsidized Loans do not accrue interest while you are in school at least half-time or during deferment periods.
- Subsidized and unsubsidized loans are federal student loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school. The U.S. Department of Education offers eligible students at participating schools Direct Subsidized Loans and Direct Unsubsidized Loans. (Some people refer to these loans as Stafford Loans or Direct Stafford Loans.)
In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.
Here’s a quick overview of Direct Subsidized Loans
- Must complete the FAFSA.
- Must meet satisfactory academic progress as determined by the Financial Aid Office.
- Must be enrolled at least half-time (six hours) each semester. You must be pre-registered at the time your disbursement arrives at the college in order for the funds to post to your account in the Business Office. Registering after the scheduled disbursement date may delay the release of your balance check.
- Must be a citizen or eligible non-citizen.
- Must not be in default on any federal loan or owe a refund back to any federal program (nor your parent when applying for a PLUS loan.)
Who can get Direct Subsidized Loans?
Direct Subsidized Loans are available to undergraduate students with financial need.
How much can you borrow?
Your school determines the amount you can borrow, and the amount may not exceed your financial need.
Who will pay the interest?
The U.S. Department of Education pays the interest on a Direct Subsidized Loan
*Note: If you received a Direct Subsidized Loan that was first disbursed between July 1, 2012, and July 1, 2014, you will be responsible for paying any interest that accrues during your grace period. If you choose not to pay the interest that accrues during your grace period, the interest will be added to your principal balance.
Source: https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized