You’ve probably heard that there are two kinds of loans: subsidized and unsubsidized. But what’s the difference? Let’s take a look.
Many people are concerned with the costs of financing their education, whether that means going to school or getting a degree. Some people are able to go to school without paying any tuition, and this can be very useful.
In this article, we’ll explore the differences between subsidized and unsubsidized loans and help you understand what they are, how they work, and how to use them to your advantage.
Subsidized Loans
Subsidized loans are a type of federal loan that the government offers to students who meet certain criteria.
Students with financial needs and who have already been accepted into a college or university may be eligible for this type of loan.
The government pays the interest rate on these loans, which is typically lower than that of regular unsubsidized loans.
Unlike Unsubsidized student loan, Subsidized Loans are loans only for undergraduate students with financial needs.
Students who are enrolled in a graduate program, or who have already completed their undergraduate degree, typically aren’t eligible for subsidized loans. Subsidized loans may also be available to students with exceptional financial needs.
Unsubsidized student loan
A subsidized loan is a need-based loan, meaning that it is awarded based on your financial need.
The government pays the interest on your loan while you’re in school, so you don’t have to worry about accruing interest while you’re studying.
In contrast, an unsubsidized student loan is not need-based. This means that you don’t have to worry about whether or not you qualify for this type of loan; it’s available to all students.
However, because the government doesn’t pay interest on these loans while you’re in school, you will have to pay them back once your studies are complete.
You may also be responsible for paying a portion of interest during the deferment period if this type of loan is used for graduate school.
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