Unsubsidized vs. subsidized student loans

When it comes to student loans, there are many terms and concepts that are important to understand. Knowing the difference between subsidized loans and unsubsidized loans is an important one.

define: subsidized student loan
Refers to a type of loan in which the interest on the loan is paid by the government while the student is in school and during periods of grace or deferment.

define: unsubsidized student loan
Refers to a type of loan in which the student is responsible for the interest on the loan amount while in school.

When applying for student loans and preparing a financial plan for your education expenses, keep things like this in mind. Obtaining subsidized loans when possible can be a wise move down the road, as these types of loans will not accumulate interest that must be repaid by the student after graduation.

Recommended reading: Understanding the subtleties of student loans