what is the difference between a subsidized and unsubsidized loan?
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Subsidized: Interest is paid by the Education Department while you're enrolled at least half time in college. Unsubsidized: Interest begins accruing as soon as the loan is disbursed, including while students are enrolled in school. ... The Education Department will continue to pay interest during this time.
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Unsubsidized Student Loans are federally guaranteed loans that are available for students who desire to pursue education, but lack the financial resources to do so. These loans are not based on financial need. ... Students are not required to make interest or principal payments until 6 months after graduation.
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One of the biggest differences: The federal government pays the interest on subsidized student loans while you're enrolled in school, but with an unsubsidized loan, you have to start paying back the interest immediately.
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Although unsubsidized student loans do not offer similar benefits as the subsidized student loan, it can still be a good option for many students. In the case of subsidized student loans, the government pays the interest on the loan while the student is still in school.
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If you need to accept loans to help cover the cost of college or career school, remember to borrow only what you need. You should accept the subsidized loan first because it has more benefits. If you have to accept an unsubsidized loan, remember that you're responsible for all the interest that accrues on that loan.
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A secured loan is one that is connected to a piece of collateral - something valuable like a car or a home. With a secured loan, the lender can take possession of the collateral if you don't repay the loan as you have agreed. ... An unsecured loan is not protected by any collateral.
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The main difference between a grant and a loan is repayment. A loan requires you to repay the money you borrow, whereas a grant does not. Grants are, essentially, a gift. In other words, they're non-repayable.
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Subsidized vs. ... That's because while your subsidized loan for undergraduate study will carry the same interest rate as an unsubsidized loan, interest won't accrue while you're still in college and during other periods of nonpayment.
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Unsubsidized Loans are loans for both undergraduate and graduate students that are not based on financial need. Eligibility is determined by your cost of attendance minus other financial aid (such as grants or scholarships). Interest is charged during in-school, deferment, and grace periods.
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Unsubsidized Federal Direct Stafford Loans and all other student loans and parent loans begin accruing interest once the loan proceeds are disbursed. When a student loan enters repayment, all accrued but unpaid interest is capitalized. The monthly payment due during repayment is based upon the new loan balance.
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Unsubsidized federal student loans are also guaranteed by the U.S. Government, but the government, while controlling (setting) the interest rate, does not pay interest for the student; rather, the interest accrues during college. ... Students can pay the interest while still in college, but few do so.
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Which to Borrow: Subsidized vs. Unsubsidized Student Loans. Anyone can borrow unsubsidized federal loans, but those who qualify for the subsidized version will save more money in interest.
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The federal Stafford Loan is one of the most affordable federal student loans and most students qualify for it. Depending on your financial need, you qualify for subsidized or unsubsidized loans. Some students qualify for both. Federal Stafford Loans can be used for tuition and other eligible expenses.
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That's because while your subsidized loan for undergraduate study will carry the same interest rate as an unsubsidized loan, interest won't accrue while you're still in college and during other periods of nonpayment.
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The maximum interest rates are 8.25% for Direct Subsidized Loans and Direct Unsubsidized Loans made to undergraduate students, 9.50% for Direct Unsubsidized Loans made to graduate and professional students, and 10.50% for Direct PLUS Loans made to parents of dependent undergraduate students or to graduate or ...
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If you are an undergraduate student, the maximum amount you can borrow each year in Direct Subsidized Loans and Direct Unsubsidized Loans ranges from $5,500 to $12,500 per year, depending on what year you are in school and your dependency status.
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Summary: Direct Unsubsidized Loans (sometimes called Unsubsidized Stafford Loans) are federal student loans borrowed through the Direct Loans program that offer undergraduate and graduate and professional students a low, fixed interest rate and flexible repayment terms.