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Financial jargon can be an extra barrier when it comes to understanding your student loan. Don’t let the fancy language fool you, understanding your student finances can be simple.
So, what’s the difference between subsidized and unsubsidized loans, and which is better for your finances? It all depends on interest.
Interest accumulates on money owed, increasing the overall expense of a student loan. With an unsubsidized loan, interest accrues while you’re attending school even though you are not requiring pay your student loans while attending school.
On the other hand, subsidized loans do not accrue interest while you are attending school. Interest will only begin once you start repaying your loans after graduation. Subsidized loans are clearly the better option, but you must financially qualify for an unsubsidized loan.
In short, unsubsidized loans accrue interest while you’re in school and subsidized loans do not. If you qualify for a subsidized loan, take it! You’ll save money throughout the life of your loan.