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Question:


What is the difference between unsubsidized and subsidized student loans?
-SophomoreYear


Answer:


Subsidized student loans, offered through programs such as the Federal Family Education Loan Program and the Federal Direct Student Loan Program, give borrowers a break in various ways. Some provide below-market interest rates or interest-free deferrals of payments until after graduation. Others come with a government guarantee against default that allows private lenders to make loans at lower rates than they otherwise would be able to and lets students borrow without having the collateral that banks usually require. Unsubsidized loans are conventional loans from private lenders at market rates and with the typical terms of commercial loans.
-Conrad de Aenlle



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