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Stafford Loans: Subsidized vs. Unsubsidized

Subsidized Stafford Loans

Subsidized Stafford loans are based on financial need. This is an economical loan for students, since the federal government pays the interest on the loan while the student is in school, during the grace period, and during deferment. (Grace is the six-month period after leaving school or dropping below half-time status.) Repayment begins when the grace period ends. Stafford Loan Limits »

Unsubsidized Stafford Loans

All qualified students regardless of their income are eligible for unsubsidized Stafford loans. The eligibility requirements are the same as those for subsidized Stafford loans; however, the student is not required to demonstrate financial need. Interest on the loan accrues from the time the loan is disbursed, although payments are deferred while the student is in school at least half time. Stafford Loan Limits »

Note: Since interest begins accruing upon disbursement, it's a good idea to make payments whenever possible.

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