What is an unsubsidized student loan?


Quick Answer

An unsubsidized student loan has interest added to the balance while the student is still enrolled in university or college. With a subsidized student loan, the government pays the interest while the student is in school. The balance of an unsubsidized loan is going to be significantly higher by graduation.

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Full Answer

Unsubsidized loans are an option for students who are unable to demonstrate adequate financial need to secure subsidized loans. Both loans have excellent interest rates compared to private loans, with current interest rates in 2014 being less than 10 percent. To avoid the higher balance of an unsubsidized loan after graduation, some students pay off the interest while still enrolled.

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