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Difference between Subsidized and Unsubsidized Loans?

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You can familiarize with the definition of the unsubsidized loan in our previous answers. Subsidized loans are the same student federal loans but they offer lower interest and more affordable conditions. The government pays off the interest and offers special deferment periods in some cases.

Some students are confused when it comes to applying for a student loan. That’s why it’s crucial to know the difference between subsidized and unsubsidized loans. The main difference lies in the payment of interest. As it was mentioned before, in the subsidized loan the other party (not a student) is liable for paying off the interest (in this case, the government).

Still, if you can’t demonstrate a real need in the financial help, you will more likely not qualify for the loan. Furthermore, graduate students can’t apply for subsidized loans. Annual loan limits are lower than unsubsidized loans offer (total amount of loan can comply $23,000 while unsubsidized offer approximately $31,000).

Speaking of the unsubsidized loans, both undergraduate and graduate students can apply for them and they don’t need to prove their need for the financial assistance in any way. The main disadvantage of this kind of loan lies in the responsibility of the student to pay off the interest even during first 6 months of studying.

These were the key points of the subsidized vs. unsubsidized loans issue.