Interest, Subsidised or Unsubsidised

Planet College is virtually awash in new to most students terms. Just the language of Financial Aid is significant and extensive. Financial Aid contains several terms which might be new to a student on Planet College. Two of these terms have to do with interest. Interest is the money you pay to borrow money. On most college loans there are two types of interest. Subsidised and Unsubsidised. When you take out a loan for most purposes, like a car for example, you usually begin paying it back immediately. This is not true for loans for school. Most of these loans are structured so you do not have to start making payments on your loan(s) until after you have finished school. In order to help students keep their debt total down the government initiated a system some time a go to allow students to defer the accumulation of interest on their loan while they are attending school. The federal government subsidises this interest until the student has graduated or discontinued attending school. This type of loan is called a Subsidised loan. There are also loans available under some circumstances which are called Unsubsidised loans. With this type of loan the interest begins accumulating as soon as the student receives the funds from the loan. When a student begins paying this type of loan, Unsubsidised, interest will already have been added to the total of the loan due. When a student begins paying back the Subsidised loan the interest will begin accumulating only then. This means that a "subsidised" loan will be cheaper than an "unsubsidised" loan.
Remember. Either way, subsidised or unsubsidised, loans are loans and they must be paid back. That is the word from Planet College