What is the difference between a subsidized and unsubsidized loans?
- An unsubsidized loan starts incurring interest from the moment it is paid out vs a subsidized loan where the federal government pays the interest until 6 months after graduation.
- An unsubsidized loan is available from the federal government and a subsidized loan is a private loan.
- An unsubsidized loan is another description of a private loan.
- A subsidized loan has a special interest rate from the US Department of Labor.
- Both subsidized and unsubsidized loans are federal student loans, but the main difference is that with a subsidized loan the government pays the interest that accrues while the borrower is in school, during the grace period after leaving school, and during deferment periods. With an unsubsidized loan, the borrower is responsible for paying all interest that accrues.
- Eligibility for subsidized loans is based on financial need, whereas unsubsidized loans are available to all eligible students regardless of financial need.
- Subsidized loans have lower borrowing limits compared to unsubsidized loans.
- Subsidized loans are only available to undergraduate students, while unsubsidized loans are available to both undergraduate and graduate students.
choose one correct answer
The correct answer is:
- An unsubsidized loan starts incurring interest from the moment it is paid out vs a subsidized loan where the federal government pays the interest until 6 months after graduation.