What's the difference between subsidized and unsubsidized loans?

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Subsidized Loans

  • Direct Subsidized Loans are only available to undergraduate students. Perkins Loans are available to undergraduate and graduate students.
  • Eligibility is based on demonstrated financial need.
  • The federal government pays the interest while you are in school at least half time, during the grace period, and during periods of authorized deferment.

Examples:

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Unsubsidized Loans

  • Available to undergraduate and graduate students, as well as parents of undergraduate students.
  • Eligibility is not based on financial need.
  • The borrower is responsible for paying all interest.

Examples: