<p>What exactly is it and how does it work?</p>
<p>It basically works like the subsidized Stafford loan. You borrow & don't have to repay until you have been out of school (graduated or dropped out) 6 months. The difference between sub & unsub is that interest doesn't begin to accumulate on a sub loan until repayment begins. With an unsub loan, the interest isn't subsidized (thus, "unsubsidized loan"). Interest begins accumulating as soon as the loan is disbursed. You can pay it as you go (we pay quarterly) or capitalize it into the loan (you'll owe interest on the interest when the payments begin). Another difference is that sub interest is currently 6% (drops for loans made next year) and unsub is 6.8% (won't drop for next year's loans, unfortunately); interest rate is fixed for the life of the loan. </p>
<p>The biggest difference is that while sub loans are need-based, unsub are technically not need based. You must file the FAFSA to get an unsub loan, even though your expected family contribution isn't taken into consideration. Here is how your eligibility is determined:</p>
<p>Cost of Attendance (budget that is published by the financial aid office) - all financial assistance (grants, scholarships, subsidized loans, work study) = eligibility for an unsubsidized Stafford loan. You can only get UP TO the maximum allowed for your year in school, even if your eligibility is higher: $5500 freshman, $6500 sophomore, $7500 junior and senior. Also ... if your eligibility is less than the maximum allowed for year in school, you can only get the amount of your eligibility (because all aid awarded CANNOT exceed your cost of attendance). If you get a scholarship after you get your loan, you might actually have to pay back some or all of the loan (this surprises people) - again, this is because aid cannot exceed cost of attendance (if you have any federal aid).</p>
<p>The notable exception is that Pell can be awarded in excess of cost of attendance (but no other federal aid would be awarded).</p>
<p>You borrow the unsub (and sub) loan through your school, usually. If your school does the direct loan, you borrow right from the government. If it's a FFELP lender, you borrow through a bank - some schools have preferred lenders, but you can use one of your choice if the school is FFELP. You have to use the program that your school participates in (Direct OR FFELP).</p>
<p>FSA</a> Portals</p>