| One of the first questions on the mind of any college | | | | the deferment period, you will be given the choice of |
| student when they receive their financial aid award | | | | making voluntary payments on that interest. Making |
| letter is, What is the difference between subsidized | | | | payments like this is a good idea if you are able; it |
| and unsubsidizedfederal student loans? Sometimes | | | | keeps you from being charged interest on your |
| students are only offered unsubsidized loans and | | | | interest. If you do not pay along the way, the |
| they are puzzled about whether they should accept | | | | interest will be added to the principle of the loan. This |
| them are not. | | | | could mean that you pay a lot of extra money in |
| Both subsidized and unsubsidized federal student | | | | interest, which is the biggest drawback of |
| loans are offered through the Federal Direct, or the | | | | unsubsidized loans. |
| FFEL Stafford Loan programs, which are administered | | | | On the other hand if you have not gotten any |
| through the federal government. Both types of loans | | | | subsidized loans, because you were told you had no |
| must be repaid. Though the terms and conditions of | | | | need because your parents make too much money |
| the loans are set by the federal government | | | | or something, there's still a good chance unsubsidized |
| (generally making them the best loan options | | | | federal loans are the best option for you. Subsidized |
| students have), the system is set up so that the | | | | loans are need-based and unsubsidized loans are not. |
| actual money comes from and is paid back to private | | | | Your level of financial need gets represented by |
| institutions - that means banks. | | | | specific numbers calculated from the information you |
| Now, here's what you really need to know before | | | | put on your FAFSA application. Without getting in to |
| taking out an unsubsidized student loan. | | | | all the particulars, students who have greater levels |
| First, with subsidized loans the government covers | | | | of financial need qualify for subsidized loans that |
| the interest payments for you while you are in school | | | | those with less need don't. Even if you have no need |
| and/or in deferment. The loan accrues interest just | | | | at all (according to the governments reckoning) you |
| like any other. You're just not responsible for paying | | | | can still be offered and receive unsubsidized loans. |
| any that accrues before you enter loan repayment | | | | Knowing the differences between these two types |
| on the principle. Students who take out $10,000 (for | | | | of loans can save a lot of confusion, and a surprising |
| instance) in subsidized loans, find that, six months | | | | amount of money, for you through your college |
| after they leave school, they basically owe $10,000 | | | | career. If you are ever in a position where you are |
| plus whatever interest that gets charged after they | | | | being offered a combination of subsidized and |
| start repayment, whenever that might be. | | | | unsubsidized loans, and you only need to take out |
| When you take out unsubsidized loans, you are | | | | half of what's being offered, go for the subsidized. |
| responsible for all the interest that the loan(s) accrue, | | | | Finally, remember, don't take out loans you don't |
| even while you are in school. While enrolled and during | | | | need, no matter how good the deal might look. |