[ad_1]
Understanding the difference between subsidized vs. unsubsidized student loans could help you save a bundle in student loan debt.
But considering how much they have in common, it’s understandable if you have trouble telling them apart (especially since they also go by other names — we’ll explain in a bit).
Both loans are part of the federal government’s financial aid offerings, designed to help students cover the cost of college. To qualify for the federal direct loan program, you must be enrolled at least half-time in school in a program that leads to a degree or a certificate.
Although unsubsidized claims a larger portion of outstanding direct loans — $563.5 billion compared to $291.5 billion in subsidized loans as of the fourth quarter of 2021 — there’s plenty of overlap among borrowers who take out both types.
We’ll explain the difference between the two loans and how each can affect your finances long after you finish your final exams.
Subsidized vs. Unsubsidized Student Loans
A side-by-side comparison of subsidized and unsubsidized loans is probably the easiest way to see the differences — we’ll get into the details after.
Loan Type Comparison
| Requirements | Direct Subsidized Loans | Direct Unsubsidized Loans | ||
|---|---|---|---|---|
| Who can borrow? | Undergraduate students | Undergrad, grad and professional degree students | ||
| Am I required to prove financial need? | Yes | No | ||
| How much can I borrow? | Limited by financial need, year in school & total. | Limited by cost to attend, year in school & total. | ||
| Is there a time limit? | No limit after July 1, 2021. | No time limit. | ||
| Who pays the interest while I’m in school and during deferment? | The government | You |
Based on this chart, the winner is direct subsidized loans. (If you don’t understand why, check that last row: Any option that includes someone else paying your bills is a winner).
But let’s take a closer look at…
[ad_2]
Source link
