<p>can anyone explain the difference. Also, if you have 2 students in college will this help in getting a good loan?</p>
<p>Subsidized Loan: the federal govt. pays the interest while the student is in college.</p>
<p>Unsubsidized Loan: the student is responsible for interest accrued while still in college.</p>
<p>When the student files the FAFSA, the student’s Expected Family Contribution (EFC) determines whether that student qualifies for for sub. or un-sub. loans.</p>
<p>Subsidized is need based. The government pays the interest until you graduate or drop below 1/2 time plus a grace period. Currently there are 2 subsidized loans:
- Perkins - very hard to get. Schools have very limited (and sometimes zero) Perkins funds to award. 5% interest and a 9 month grace period.
- Sub Stafford (or direct) loan. 6 month grace period. This year the interest rate is 3.4% but is scheduled to go up to 6.8% next year.</p>
<p>Unsub loans are not need based. You are responsible for the interest from the day the loan is disbursed. Interest on the unsub Stafford (Direct) is 6.8%.</p>
<p>The maximum direct (Stafford) loan a dependent freshman can receive is $5500 of which up to $3500 *may *be subsidized if a student has need.</p>
<p>Whether having 2 in school at the same time makes them eligible for a sub loan will depend on the EFC (based on income and assets) and the cost of the school, and other aid. There must be need for a sub loan. Unsub loans can be used toward the EFC. Sub loans can not.</p>
<p>Sub loans may not be around at all much longer. They are no longer available for grad students starting next year. And the rumor is that they may go away for undergrads as well.</p>