Subsidized vs Unsubsidized Stafford Loan

Do you know the main differences between subsidized vs unsubsidized Stafford loan? With low-interest loans, Stafford federal student loans are offered government to help students for paying the college fees, including tuition and other educational cost. These student loans come with two available types: subsidized and unsubsidized. Both of them allow up to 10 years to be paid back with a fixed interest rate that will not exceed 6.8%. So what are differences between subsidized and unsubsidized Stafford loan?

The difference between subsidized vs unsubsidized Stafford loan is on the amount of interest you pay on the loan. Subsidized student loans are those loans for which the government pays the daily interest your loan builds while you are enrolled at least half-time and during any approved periods of deferment or forbearance. The government distributes subsidized loan amounts based on financial need.

Meanwhile, unsubsidized student loans are aimed for whoever has to pay all accrued interest. The government does not offer any assistance relating to interest payments for unsubsidized loans. Unsubsidized loans start charging interest from the moment the money is given to the student. Sometimes, the lender offers the borrower the option to make “interest-only” payments over the course of his or her time in school. Unsubsidized Stafford loans can be used to supplement subsidized Stafford loans.

If you already know about difference between subsidized vs unsubsidized Stafford student loan, it is the time to choose right Stafford student loan whether it is subsidized or unsubsidized. It depends on your financial need, your eligibility requirements, and whether or not you would like your interest paid by the government while you are in school.

Source: Education Planner