loans
Subsidized and unsubsidized loans
The primary difference between subsidized and unsubsidized loans is how interest is paid. With a subsidized loan, the federal government pays the interest on behalf of the student while the student is in school and during the grace period. With an unsubsidized loan, the student is responsible for paying the interest.
Students who demonstrate financial need may be eligible to receive all or a portion of their "base" loan amount in the form of a Federal Direct Subsidized Loan. Interest on a subsidized loan is paid by the federal government for the student borrower during eligible in-school, grace, and deferment periods.
Unlike the "subsidized" loan, the Federal Direct Unsubsidized Loan is not based on a student's financial need. While the Federal Direct Unsubsidized Loan is generally subject to the same terms and conditions as the subsidized loan, the unsubsidized loan borrower assumes the responsibility for all the interest that accrues during in-school, grace, and deferment periods.
For more details, review loan limits.