What is the difference between a subsidized and an unsubsidized loan?
Updated October 7, 2022
A Subsidized Direct Loan is student loan where the federal government pays the interest while you are in school and may pay it during your grace or deferment period. Unsubsidized loans start accruing interest as soon as the loan is disbursed to you.
Subsidized Direct Loans are a much better option for students who are eligible. If you have to take out a student loan, we strongly recommend you only borrow subsidized loans.?If you are a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans.?This time limit does not apply to Direct Unsubsidized Loans or Direct PLUS Loans.
Visit the Federal Student Aid website to learn more.