Demystifying Financial Jargon: Subsidized vs. Unsubsidized Loans

Subsidized student loans

Subsidized student loans are typically only offered for federal loans and are available to undergraduate students who have demonstrated financial need. The Federal government will cover the cost of interest while you’re enrolled in school at least part-time and generally during any times of forbearance, deferment and your grace period as well. It is your university that will determine how much you can borrow. Subsidized student loans are only available to undergraduate students.

Unsubsidized student loans

Unsubsidized student loans are federal loans which do not cover the cost of your interest at any point as it’s not based on financial need. Interest begins accruing from the moment you take the loan. The one advantage of unsubsidized verse subsidized is they’re available to both undergraduate and graduate students, you’re not required to demonstrate financial hardship in order to be eligible and there is a higher loan limit.

See also: Unsecured debt

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