what are subsidized and unsubsidized student loans?
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Subsidized: Interest is paid by the Education Department while you're enrolled at least half time in college. Unsubsidized: Interest begins accruing as soon as the loan is disbursed, including while students are enrolled in school. ... The Education Department will continue to pay interest during this time.
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The federal government pays the interest for Direct Subsidized Loans while the student is in college or while the loan is in deferment. Interest begins accruing for Direct Unsubsidized Loans as soon as the loan is taken out.
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Direct Subsidized loans: The Department of Education will pay the interest on your loans while you're enrolled in school at least half-time, during your grace period, and during any period of deferment. Direct Unsubsidized loans: You are responsible for the interest that accrues during all periods.
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If you are a graduate or professional student, you can borrow up to $20,500 each year in Direct Unsubsidized Loans. Direct PLUS Loans can also be used for the remainder of your college costs, as determined by your school, not covered by other financial aid.
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The maximum interest rates are 8.25% for Direct Subsidized Loans and Direct Unsubsidized Loans made to undergraduate students, 9.50% for Direct Unsubsidized Loans made to graduate and professional students, and 10.50% for Direct PLUS Loans made to parents of dependent undergraduate students or to graduate or ...
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Students who lack the resources are granted unsubsidized student loans, federally-guaranteed loans that start accruing interest as soon as the loan is disbursed. It is a fixed interest rate loan and students are not required to start making payments while still in school.
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Perkins Loan Information & Eligibility. ... Perkins loans are federal student loans offered to undergraduate and graduate students with exceptional financial need. They are always subsidized, meaning you won't pay or accrue any interest while you are in school or during the nine-month grace period following graduation.
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Subsidized vs. unsubsidized student loans. ... That's because while your subsidized loan for undergraduate study will carry the same interest rate as an unsubsidized loan, interest won't accrue while you're still in college and during other periods of nonpayment.
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The Direct Subsidized Loan is no longer available to graduate students. As of July 1, 2012, students attending graduate school or professional school are eligible only for the Direct Unsubsidized Loan. Undergraduate students remain eligible for new Direct Subsidized Loans.
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Unsubsidized Federal Direct Stafford Loans and all other student loans and parent loans begin accruing interest once the loan proceeds are disbursed. When a student loan enters repayment, all accrued but unpaid interest is capitalized. The monthly payment due during repayment is based upon the new loan balance.
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Direct Stafford Loans are student loans that must be repaid and are available to both undergraduate and graduate students. ... Subsidized Stafford loan - A loan for which the government pays the interest while you are in school, during grace periods, and during any deferment periods.
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Direct Stafford Loan. Direct Stafford Loans are student loans that must be repaid and are available to both undergraduate and graduate students. ... Subsidized Stafford loan - A loan for which the government pays the interest while you are in school, during grace periods, and during any deferment periods.
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Generally, there are two types of student loans—federal and private. Federal student loans and federal parent loans: These loans are funded by the federal government. Private student loans: These loans are nonfederal loans, made by a lender such as a bank, credit union, state agency, or a school.
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Summary: Direct Subsidized Loans (sometimes called Subsidized Stafford Loans) are federal student loans borrowed through the Direct Loans program that offer undergraduate students a low, fixed interest rate and flexible repayment terms.
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Unlike a subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan).
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Anyone can borrow unsubsidized federal loans, but those who qualify for the subsidized version will save more money in interest.
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In July 2012, subsidized federal Stafford loans, which didn't charge interest to students while they were in school, were eliminated for graduate students. ... [Learn more about grad student loan options.] Graduate PLUS loans are federal student loans that fill in any remaining funding need.