<p>Do both types of loans have to be paid back? What's the difference between them? </p>
<p>Thanks.</p>
<p>Yes, both must be repaid. That is why they are called loans, rather than grants.</p>
<p>With a subsidized loan, the interest is paid by the government until the loan goes into repayment (6 months after you graduate or drop below half time for sub direct loans, 9 months for Perkins loans). The current interest rate on a sub direct loan is 3.4%. On a Perkins it is 5%.</p>
<p>With an unsubsidized loan you are responsible for the interest from the day the loan is disbursed. You can defer paying the interest while you are in school, but it will still accumulate and will be added to the loan - so the debt will increase. The current interest rate on unsub direct loans is 6.8%.</p>
<p>Thanks for the info! Well I assumed that loans meant repay, but wasn’t sure about the “subsidized” portion.</p>