what is the difference between unsubsidized and subsidized loan

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  • What is the difference between subsidized and unsubsidized student loans?

  • Subsidized and unsubsidized loans are very different to each other even though most of the time these types of loans are taken out by students who are currently at school or college pursuing higher studies. The main difference between these two types of loans is the amount that can be borrowed.

  • What are the benefits of a subsidized loan?

  • Note: The benefit of a subsidized loan is that it does not accrue interest like an unsubsidized loan. The government covers interest costs temporarily while the student is enrolled in school.

  • How much can you borrow in unsubsidized student loans?

  • For example, if you鈥檙e a dependent undergraduate and borrow the full amount of subsidized loans your first year ($3,500), you can only borrow another $2,000 in unsubsidized student loans. But if you didn鈥檛 qualify for any subsidized student loans, then you can borrow up to the full $5,500 in unsubsidized federal direct loans.

  • What is a federal direct subsidized loan?

  • Federal direct subsidized loans are only available to undergraduate borrowers who meet financial need qualifications. According to the ED, 鈥渇inancial need鈥?is the difference between the cost of attendance and the student鈥檚 expected family contribution. And you can borrow more in subsidized loans than you need.

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