What is the difference between a federal subsidized loan and a federal unsubsidized loan?

The differences between a Federal Direct Subsidized Loan and a Federal Direct Unsubsidized Loan are as follows:

  • The subsidized loan is based on financial need; the unsubsidized loan can be based on financial need and/or to replace the family contribution.
  • No interest accrues on the subsidized loan while the student is enrolled at least half-time; interest accrues on the unsubsidized loan beginning immediately upon disbursement.
  • The maximum amount for a subsidized loan is based on financial need and cannot exceed $3,500, $4,500, or $5,500 for freshmen, sophomores, and juniors/seniors respectively. The unsubsidized loan maximum is the difference between $5,500, $6,500, or $7,500 (based on grade level) and the amount received in subsidized loan.
  • Independent students have access to an additional $4,000 (freshmen/sophomores) or $5,000 (juniors/seniors) unsubsidized loan up to the cost of attendance.
  • Additionally, the interest rate for the subsidized loan is lower than the interest rate for the unsubsidized loan. 
    Learn more about these two loan programs.
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