Loans - What you need to know

If grants and scholarships don’t cover the full cost of your tuition, you may need to take out a loan to cover the remaining balance.

When you complete your FAFSA, the Department of Education (DOE) may offer you loans to help with the cost of attending college. They offer subsidized, unsubsidized, and parent loans. Here is a brief description of the difference.

Direct Subsidized Loan -are available to undergraduate students with financial need. 

Direct Unsubsidized Loan - Direct Unsubsidized Loans are available to undergraduate, graduate, and professional students; there is no requirement to demonstrate financial need.

*The key difference between the 2 loans listed above is the interest payment. 

The DOE pays the interest on a Direct Subsidized Loan

• while you’re in school at least half-time,

• for the first six months after you leave school (referred to as a grace period*), and

• during a period of deferment (a postponement of loan payments).

You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods.

Good to know

During periods of time when you are not required to make payments—such as while you are in school, in a deferment, or in a forbearance—your interest will accrue (accumulate). It will, in certain instances, be capitalized (which means that your interest will be added to the principal amount of your loan). Whether your unpaid interest capitalizes or not, you are still responsible for paying the interest that accrues. You can always choose to pay the interest that accrues even when you are not required to make a payment.

To learn more about student loans through the DOE, please visit http://www.studentaid.gov