What's the difference between a subsidized and a non-subsidized stafford loan?

Subsidized Stafford Loan is a federal guaranteed loan that is based on a person’s financial need, while Unsubsidized Stafford Loan is a federal guaranteed loan that is not based on a person’s financial need. Another difference is that the maximum amounts a person can receive per school year are different for both types of loans (Freshman is given a maximum amount of $3,500 per year in subsidized Stafford Loan, while with the Unsubsidized Stafford Loan he would get $2,000 if he is an dependent student or $6,000 if he is an independent student. For the subsidized Stafford Loan, you do not pay any interest or principal during the grace period.

But the Unsubsidized Stafford Loan requires that you pay the interest accrued. *Advantages of Subsidized Stafford Loan 1. The government is responsible for paying your interest if you are still a half-time student 2.

The loan gives a maximum of $23,000 to students when they graduate 3. With this loan no payments will be made until 6 months after the person stops to be a half-time student Disadvantages of Subsidized Stafford Loan 1. The amount a person can borrow depends on his/her grade level in school and on the kind of student he/she is.2.

Origination and insurance fees are deducted from every single disbursement Advantages of Unsubsidized Stafford Loan 1. With the Unsubsidized Stafford Loan, a person is allowed to defer all payments until after he/she graduates.2. If a person does not demonstrate qualify for Subsidized Stafford, he may borrow under this type of loan.

3.It also gives a student a maximum of $23,000 upon graduation Disadvantages of unsubsidized Stafford Loan 1. You would be responsible for paying the accrued Interest on the loan, while you are in school. 2.

Just like in the Subsidized Stafford Loan, The amount a person can borrow depends on his/her grade level in school and on the kind of student he/she is. 3. Loan fees are also subtracted from each disbursement you make.

In a subsidized Stafford loan, the government pays interest on the loan until you finish and graduate from college. To be able to enjoy and qualify for this type of loan you must be able to demonstrate and prove your financial need. On the other hand, an unsubsidized Stafford loans offers the same low interest rate as the subsidized version but you have to pay the interest on the loan from the date you have been grated the loan.To be qualify for Stafford loan you must be a U.S. citizen or eligible non-citizen, have a high school diploma or GED certification, not in default on any other student loans, and is enrolled at least half-time in an accredited degree program.

To get one you must fires fill out FAFSA or Free Application for Federal Student Aid form at fafsa.ed.gov and receive your financial aide award package which will outline what types of education funding you are eligible of. If you qualify you can then return to EdFed to apply for your Stafford loan by filling out their quick and simple online application. After this application has been processed an application will be mailed to you and you just sign it, put on the date and return in the enclosed envelop.

There will be no credit check if you apply for a Stafford loan.

With a subsidized Stafford Loan, the government pays the interest of the loan while you are in school, for the first six months after graduation or if you come in a situation of forebearance or deferment. Those students who have low income and attend school at least half time are eligible for the subsidized Stafford Loan. The unsubsidized Stafford Loans are eligible without regard to financial need.

With this type of loan, the government does not pay any of the interest. The interest begins as soon as the money from the loan is paid to the school. The borrower start to repay the loan immedietly after the loan is disbursed, but you can defer payment until after graduation.

Many people are eligible for both types of loans.

Subsidized vs. unsubsidized loans If you are awarded a loan as part of your financial aid package, you may be eligible for either subsidized or unsubsidized funds, or a combination of both. The big difference between the two is when the interest begins to accrue. * Subsidized loans are awarded on the basis of financial need.

You won't be charged any interest before you begin repaying the loan because the federal government subsidizes the interest during this time. * Unsubsidized loans charge interest from the time the money is first disbursed until it is paid in full. The interest is capitalized, meaning that you pay interest on any interest that has already accrued.

One way to minimize how much interest accrues is to pay the interest as it accumulates. I personally believe that subsidized is better, only because in the end you'll end up paying less. Hope this helps!

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