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Subsidized v, Unsubsidized Student Loans; The Important Differences

The U.S. Department of Education’s Stafford student loan program has both subsidized and unsubsidized loans, and knowing the difference between the two is very important.

  • Eligibility. Subsidized loans are available only to those in financial need. This means that the school determines the amount you can borrow, and it cannot exceed your need.
  • Use. Subsidized loans are only available for undergraduate school, while unsubsidized loans can be used by graduate students as well.
  • Interest Accumulation. With subsidized loans, the government pays the interest during eriods of deferment, rather than allowing it to accumulate and capitalize into the loan balance.

More Information

If you are looking for more information about federal financial aid for college, then download my free book, Applying for Federal Financial Aid: The Definitive Guide for Students and Parents.

For more information about what happens after you graduate, get my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.

You can also access the latest news on student loans, get answers to Frequently Asked Questions, and read articles in my Library. Continue to educate yourself as you go through the process of making smart decisions about college financing!

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Steven J. Richardson
Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.