Compare Subsidized vs. Unsubsidized Student Loans: Know the Differences


Compare Subsidized vs. Unsubsidized Student Loans: Know the Differences

Definition of “Subsidized vs Unsubsidized Student Loans”

Student loans can either be classified as subsidized or unsubsidized. Subsidized student loans are loans for which the federal government pays the interest while the student is in school, during the grace period, and during periods of deferment. Unsubsidized student loans, on the other hand, are loans that accrue interest from the time they are disbursed until they are paid off.

Read more

Discover Capitalized Interest on Student Loans: The Hidden Cost to Watch For


Discover Capitalized Interest on Student Loans: The Hidden Cost to Watch For

Capitalized interest is the unpaid interest on a student loan that is added to the loan balance. This can happen when the borrower defers or capitalizes the interest during the grace period or forbearance period, or when the borrower makes payments that are less than the amount of interest that is accruing on the loan. As a result, the borrower ends up paying interest on the interest, which can significantly increase the total cost of the loan.

Capitalized interest can have a number of negative consequences for borrowers. It can increase the monthly payment amount, the total amount of interest paid over the life of the loan, and the length of time it takes to repay the loan. In some cases, capitalized interest can even lead to default.

Read more