Subsidized vs Unsubsidized Loan Question

[marianne202]

Hey All,

So I finally broke down and had to do a student loan for grad school. I initially only took the subsidized portion and are paying the rest in cash, but the school keeps sending me messages trying to encourage me to take the unsubsidized loan. If I take that loan I won't have to save up the difference between semesters and my book costs and extra supplies would be paid for. Since this is my first time dealing with school loans here is my question.

Isn't unsubsidized required to be paid back starting right after it is dispursed? Unsub loans don't give you until 6 months after graduation for payback and interest deferral right? If I can get the unsub. loan and not have any payments or interest accrue for 18 months then it would be worth it and I could just pay it off as I go, but if interest starts from day one and the payments start the next month, then I'm better off like I am.

The financial aid people are not very bright at Bellevue or I would ask them. But everytime I ask a question I get one answer from one person then another answer from someone else. I figured since so many here are much more familiar with federal finanical aid I would ask you guys!

Thanks in advance for sharing you knowledge and helping me figure this out!

[Sunshine]

Hi Marianne,

From what I understand, both subsidized and unsubsidized loans will give you a six-month grace period before they enter into repayment status. The unsubsidized loan will, however, begin to accrue interest right away. You will have a choice as to whether you want to pay the interest off monthly (recommended) or simply begin paying the principle amount after your grace period. If you can, it is best to pay off the monthly interest as you go- you'll save money in the long run.

[sheba]

I found this NASFAA document very helpful in it's descriptions of how student loans work.

Federal Student
Financial Aid