What is the difference between subsidized and unsubsidized loans?

Subsidized student loans are a need based loan in which the government pays the interest while you meet one of the following criteria:

  • You're enrolled in at least half-time status in school
  • Six-months after you leave school or drop below half-time status (your grace period)
  • During a period of deferment

Unsubsidized loans are a non-need based loan offered to all students and start accruing interest as soon as you receive them.  If you choose not to pay off the accrued interest during your enrollment, any interest will be capitalized back into the principal balance (added to the principal amount of your loan).

You can read more about both of these at http://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized.