The main difference is who is responsible for interest while you’re in school and during certain qualifying periods. With a subsidized federal student loan, eligible borrowers generally do not have to pay the interest that accrues during qualifying periods such as enrollment at least half-time or certain deferments. This can reduce the amount you owe when repayment begins.
With an unsubsidized loan, the borrower is responsible for the interest from the time the loan is disbursed. If you don’t pay the accumulating interest, it can increase the overall cost of borrowing and, in some situations, may be added to the loan balance.
Your eligibility for subsidized borrowing depends on federal student-aid requirements and financial circumstances, while unsubsidized loans may be available to a broader group of eligible students.
Before borrowing, understand how interest will accumulate and what your future payments could look like. You can use our student loan calculator to estimate potential repayment costs.
