Subsidized vs unsubsidized student loans: what's the difference?

Answer Question Report Abuse

Kathryn B. Hauer, CERTIFIED FINANCIAL PLANNER (TM)

@KathrynHauer • 10/07/16 This answer was first published on 10/07/16. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

Permalink Report Abuse

Hi! Thanks for writing! This question comes up a lot, and it’s hard to keep these two types of loans straight. The Federal Student Loan website has lots of helpful info you can check out. In brief, both of these student loans are issued by the government. The main differences are

1. Which students receive each type of loan

2. When you pay interest on the money you are borrowing

Subsidized loans are issued only to undergrad students with demonstrated financial need (as shown in their completed FAFSA. Unsubsidized loans can be issued to undergrad and grad students who are not classified as requiring financial assistance. (Let’s face it…almost all of us have financial need, but the definition here for student loans is very specific!)

The other difference is that you start being charged interest right when you take our your unsubsidized loan – you don’t need to start paying it back until after you graduate, but that interest is building over those 4 or more years. With a subsidized loan, you don’t get charged interest until after you graduate. Interest accrues during that time, but the government pays it.

Be sure you complete and submit your FAFSA each year! Best wishes to you.

Answer Question

WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.

WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by a WalletHub user. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.

Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.

Ask a Question

140

Ask Question

Ask Your Question

WalletHub Transparency

We are committed to being fully transparent with our readers. Opinions expressed here are the author’s and/or WalletHub editors'. WalletHub editorial content on this page is not provided, commissioned, reviewed, approved or otherwise endorsed by any company. In addition, it is not any company’s responsibility to ensure all questions are answered.