Unsubsidized stafford loan what is it

Government loan rates: Current student loan interest rates. When choosing a federal student loan to pay for college , the type of loan you take out — either subsidized or unsubsidized — will affect how much you owe after graduation. Don't have to demonstrate financial need. Lower loan limits compared with unsubsidized loans. Higher loan limits compared with subsidized loans. How interest works while you're enrolled in college. Undergraduate and graduate or professional degree students.

Both subsidized and unsubsidized loans are distributed as part of the federal direct loan program. Here are the main differences between subsidized and unsubsidized student loans:. Subsidized: Undergraduate students enrolled at least half time. Unsubsidized: Undergraduate, graduate and professional degree students enrolled at least half time.

This is equal to six years for a typical four-year program or three years for a typical two-year program. Unsubsidized: There is no time limit on using these loans. Unsubsidized: Any students can borrow, regardless of financial need.

Subsidized: Annual loan limits vary, but they are typically lower than unsubsidized loan limits. Unsubsidized: Annual loan limits vary but are typically higher than subsidized loan limits. The grace period -- the time before beginning repayment.

Periods of authorized deferment -- postponement. Periods of forbearance -- authorized delay in loan principal payment.

Four repayment plans are available to borrowers with either subsidized or unsubsidized loans:. The Income Contingent Repayment Plan bases the monthly repayment amount on annual income, family size and the loan amount. The Income-Based Repayment Plan bases payments on total federal loan payments as a percentage of income.

The Extended Repayment Plan allows the borrower to extend repayment over a period of 12 to 30 years, depending on the loan amount. Under the Graduated Repayment Plan, payments are lower at the beginning of the repayment period and then increase every two years over 12 to 30 years.

For more information, call or visit www. Top Publications. Preparing for College. Choosing a College. Paying for College. Search for:. Preparing for College Why College? The Annual Student Loan Acknowledgement will be federally required as of the academic year. It is best to make the adjustments online or submit the form to our office for processing well before the funds are set to disburse to your billing account in order to avoid complications with the return of these funds.

Students receiving any type of federal direct loan will receive a Disclosure Statement from the Federal Loan Origination Center for each new loan. The disclosure statement will provide comprehensive information about the type s of loan s , loan amounts, the loan period, and anticipated disbursement dates. You should save every Disclosure Statement your receive for future reference, and can also access them online at any time by logging in to studentaid.

Financial Aid and Scholarships Menu. The borrower is responsible for the interest that accrues on unsubsidized student loans during in-school and grace periods, as well as deferments and forbearances. Borrowers can choose to pay the interest as it accrues or to defer paying the interest until the student loans enter repayment. All federal student loans have a fixed interest rate. If the borrower does not pay the interest as it accrues, the interest will capitalize and be added to the principal loan balance when the loan enters repayment.

This can increase the size of the loan by as much as a tenth to a quarter. It also leads to interest compounding, since interest will be charged on the capitalized interest. Subsidized loans are awarded based on financial need. Unsubsidized loans are available to all students, regardless of need. Private student loans and parent loans give borrowers more options than unsubsidized federal loans for making payments on the student loans during the in-school and grace periods.

The most common of these are full deferment of principal and interest, interest-only payments and immediate repayment of principal and interest. Federal student loans provide for full deferment during the in-school and grace periods. Immediate repayment is an option on federal parent loans.