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What is the difference between subsidized and unsubsidized Federal Direct Stafford loans?

Subsidized vs. Unsubsidized Federal Direct Stafford Loans

The federal government pays the interest on subsidized Federal Direct Stafford loans while the student is enrolled at an approved school at least half-time. To receive subsidized Federal Direct Stafford loans, applying students must demonstrate need.

The federal government does not pay interest on unsubsidized Federal Direct Stafford loans while the the student is enrolled and interest on the loan balance begins accruing the date the loan is disbursed. However, students do not need to demonstrate need to receive unsubsidized loans.

Subsidized vs. Unsubsidized Loans During Deferment

While enrolled at least half-time in an approved school, students’ Federal Direct Stafford loan will be considered in deferment. Students whose loans are in deferment are not required to make payments until the deferment period ends, usually six months after graduation or after the student drops below half-time status. However, interest will accrue during deferment on all unsubsidized federal direct stafford loans.

Students may make payments on both subsidized and unsubsidized loans before the deferment period concludes without penalty.

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