unsubsidized loans add interest over the years that YOU have to pay for in the long run. subsidized loans add interest that the government pays for and you dont have to owe the interest back. basically, subsidized is much better.
The big drawback with unsubsidized student loans is that they're more expensive than subsidized student loans. You're responsible for paying the interest on that loan from day one. Unsubsidized loans are not the worst loans you can borrow in terms of pure cost and the interest rate that you'll receive.
Once you graduate, drop below half-time enrollment, or leave school, your federal student loan goes into repayment. However, if you have a Direct Subsidized, Direct Unsubsidized, or Federal Family Education Loan, you have a six-month grace period before you are required to start making regular payments.
A subsidized loan is your best option. With these loans, the federal government pays the interest charges for you while you're in college.
Explore your federal options first
For most student borrowers, federal Direct loans are the better option. They almost always cost less and are easier to repay. (This may not be the case if you are a parent or graduate student considering federal PLUS loans, though.)
Differences Between Direct Subsidized Loans and Direct Unsubsidized Loans. In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.
Subsidized loans are typically better than unsubsidized ones since you save more money on interest charges. However, not all borrowers are eligible for subsidized loans since you need to demonstrate financial need.
Both Direct Subsidized Loans and Direct Unsubsidized Loans are offered to students regardless of their credit history and neither will result in a hard inquiry. A Direct PLUS Loan, however, does require a credit check, so if you're considering one, your credit scores may take a slight hit.
If you are awarded Federal Direct Subsidized or Unsubsidized loans, each loan must be accepted or declined. ALL of a Subsidized Loan must be accepted before accepting any portion of an Unsubsidized Loan.
You'll have to repay the money with interest. Subsidized loans don't generally start accruing (accumulating) interest until you leave school (or drop below half-time enrollment), so accept a subsidized loan before an unsubsidized loan.
How will I receive my Direct Subsidized Loan or Direct Unsubsidized Loan funds? The school will first apply the loan funds to your school account to pay for tuition, fees, room and board as well as any other school charges. Any additional loan funds will be returned to you.
No, you don't have to accept all of the financial aid offered to you. However, it is still very important to note that it is okay to accept all of it.
Which loans are eligible for loan forgiveness? Only Federal Direct Loan Program loans that are not in default are eligible for PSLF (ie - Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, Direct Consolidation Loans).
Interest accrual, interest capitalization, fees, deferment, forbearance, and grace periods can all increase your student loan balance. Paying more than the minimum each month, making extra payments, and paying interest while in school can help reduce your loan costs.
For eligible students, subsidized loans are the ideal choice as they come with lower interest costs. On the other hand, unsubsidized loans can be a suitable option for those who do not meet the criteria for subsidized loans or require a higher amount. Financial responsibility is essential for student borrowers.
There are some differences around how the various data elements on a credit report factor into the score calculations. Although credit scoring models vary, generally, credit scores from 660 to 724 are considered good; 725 to 759 are considered very good; and 760 and up are considered excellent.
How student loans affect your credit score. Student loans are a type of installment loan, similar to a car loan, personal loan, or mortgage. They are part of your credit report, and can impact your payment history, length of your credit history and credit mix. Paying on time could help your score.
If you take out a Direct Subsidized Loan, you will not be charged interest while you're in school, during your grace period, or during other periods of deferment. If you take out a Direct Unsubsidized Loan, interest will accrue on your loan as soon as it is disbursed, even while you are in school.
Grants and Student Loans
Any money left over is paid to you directly for other education expenses. If you get your loan money, but then you realize that you don't need the money after all, you may cancel all or part of your loan within 120 days of receiving it and no interest or fees will be charged.
Federal student loans are the most common type of student loan. There are four main types of federal student loans: subsidized, unsubsidized, parent loans, and consolidation loans. There are also private student loans, which generally have higher interest rates and stricter requirements.
Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan).
Federal student loans are made by the government, with terms and conditions that are set by law, and include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans.
There are no income limits to apply, and many state and private colleges use the FAFSA to determine your financial aid eligibility. To qualify for aid, however, you'll also need to submit a FAFSA every year you're in school.