Subsidized vs. Unsubsidized Student Loans: What’s The Difference?

When referring to student loans, borrowers want to know what is the difference between subsidized student loans and unsubsidized student loans, how much will they have to pay in interest and which is better.

Subsidized vs Unsubsidized Loans Quick Guide

A subsidy is a form of governmental financial support. In terms of federal student loans, the support boils down to whether the government covers the student loan interest.

Which is better, subsidized or unsubsidized loans?

subsidized student loans do not accrue interest while borrowers are in school Unsubsidized student loans start accruing interest the minute a loan is disbursed to the borrower.

How interest works for Subsidized Loans

1. Government covers interest as long as student is enrolled in school 2. During deferment or forbearance student loan borrowers don't accrue interest

How interest works for Unsubsidized Loans

The problem with unsubsidized student loans is that a $20,000 loan could end up being $26,000 or more before a borrower can even start to make payments.

Should you avoid unsubsidized loans?

If possible, avoiding unsubsidized student loans is your best bet. When potential student loan borrowers fill out their FASFA forms, they are essentially demonstrating their level of financial need.

Tap the link below to learn  More About  Subsidized vs. Unsubsidized Student Loans

Get your copy of my free Side Hustle ACTION Guide & learn how to start making money on the side using these proven steps that have helped 1,000's!