To keep it simple, both Direct Subsidized and Direct Unsubsidized loans are federal loans that are given to those students eligible for Financial Aid to help cover all or at least some of the costs associated with pursuing higher education at an accredited College, University or Trade School. Both loans do not require any sort of payments while you are actively attending school at least half-time.
Subsidized vs. Unsubsidized Loans
As you can see, knowing the difference between Subsidized and Unsubsidized Loans is important to your wallet. While in school or on deferment Subsidized loans interest rates are paid by the DOE and Unsubsidized loans interest rates are paid by the student. However, it is equally important to understand the short vs. long-term affects. To get a full understanding, lets look at an example of two Undergraduate students who are similar in all aspects other than their EFC while attending school for 4 years.
Student 1’s EFC showed a financial need over the 4 years and thus the student was able to get Subsidized funds.
Student 2’s EFC did not show a financial need over the 4 years and thus the student was only able to get Unsubsidized funds.*Please note that this is only an example to show the long term affects for Subsidized vs. Unsubsidized over the life of your loans while in repayment. Your actual repayment amounts will very.