Subsidized vs. Unsubsidized Federal Student Loans

Learn the differences between unsubsidized and subsidized Federal student loans

There are many small but potentially crucial details you'll need to pay attention to when sorting through various loan options and comparing financial aid award packages. One of which is the difference between subsidized and unsubsidized Federal student loans. The former generally refers to Federal student loan programs where the government pays the interest on the loan while the student is enrolled in school.

It's always a good idea to exhaust subsidized Federal student loans - which can both lower the interest rate you and your child will pay and defer repayment of the loan - before filling the remaining expense gap with private student loans.

Subsidized student loan details

A subsidized Federal student loan is one in which a borrower is not responsible for paying the interest while they're still in school, or during a period in which they have earned a grace period or a deferment. Subsidized Federal student loans are awarded to those students that demonstrate a financial need.

Unsubsidized student loan details

Unsubsidized federal student loans apply interest to the loan amount from the start. Interest on unsubsidized loans begins accruing upon disbursement (or upon enrollment in school), and continues through the full life of the loan.

Learn more about affordable student loan options from Charter One

You can find helpful information about financing your college education, including federal and private student loan options. If you are interested in additional student loan resources or have questions, call a student loan specialist at 1-800-721-3969, and we'll help walk you through the entire process of financing your child's education.

Additional student loan and college planning resources

APR 101: What Does APR Mean?
Student Loan Repayment
What happens to my loans when I graduate?
Student Loan Deferment and Deferred Interest
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