What are the differences between subsidized & unsubsidized federal loans?

Subsidized loans are loans for which the Federal Government pays the accrued interest during any approved deferment periods.

Unsubsidized loans are loans for which the borrower is responsible for paying the interest that accrues on the loan from the date of disbursement until the loan is paid in full, regardless of enrollment status.

How does interest accrue?


Interest accrues on your student loan from the day the loan is disbursed until the day your loan balance reaches $0.00. We use a simple-interest formula to calculate your daily interest accrual:
Interest rate x current principal balance ÷ number of days  in the year = daily interest