11.03.09 | Subsidized vs. Unsubsidized Stafford Loans
There are two primary differences between the subsidized and unsubsidized Stafford loan, the interest rate and when the interest begins accruing on the loan.
First off, you can not choose which type of Stafford loan you want. It is all based on need after you complete your FAFSA. Some students end up taking out both kinds of Stafford loans, especially in graduate school when the tuition costs soar.
Right now if you were to qualify for a subsidized Stafford loan for undergraduate study your rate would be 5.6% for the 2009-2010 academic year. The unsubsidized rate is 6.8% as is the graduate Stafford loan rate (both sub and unsub).
As for the interest rates, the federal government defers interest payments on subsidized Stafford loans, which are available to students based on low family income. Unsubsidized loans, on which interest begins accruing while the student is in college, are available to students regardless of income.
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