Subsidized Loan vs. Unsubsidized Loan

When approaching higher education, figuring out how to finance it can be a major consideration for many individuals. The Federal government, via the Department of Education, provides subsidized and unsubsidized loans to eligible students, at participating schools, funding the post-secondary education of many people. This guide will provide you with what you need to know to clearly understand the difference between subsidized loans and unsubsidized loans.

Subsidized Loans

Subsidized loans are provided by the Department of Education to students that are in financial need, based on their criteria.
Key features of a subsidized loan include:The financial benefit of the government picking up the interest on the loan is significant and can represent thousands of dollars saved before you start repaying the loan yourself.

Unsubsidized Loans

Subsidized loans are provided by the Department of Education to students seeking them and there is no requirement for the students to demonstrate financial need. Key features include:These loans are still useful for students that need the extra funds to pursue an education but cannot meet the requirements of ‘financial need'. While a student would certainly prefer a subsidized loan there are times when an unsubsidized loan needs to be accepted.

Relevant to Both Types of Loans

The difference between these loans really relates to who pays the interest while in school and shortly after. Aside from that the terms of these loans are comparable and provided by the Department of Education.As your school will have to participate in your application you typically want to visit the financial aid department to go through the application process and ensure you have everything you need prepared for a successful application.
By Jeffrey Glen

Copyrighted 2016. Content published with author's permission.

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