What is the difference between a Subsidized and Unsubsidized Stafford Loan?

Subsidized Loans

If you have a subsidized loan, you will not be charged interest while you are enrolled in school at least half time, during a grace period, or during authorized periods of deferment. Interest will begin to accrue(accumulate) when you enter repayment. Repayment usually begins within 6 months after you graduate, leave school or do not enroll at least half time (6 credit hours/semester).

Subsized loans are based on financial need.

Unsubsidized Loans

If you have an unsubsidized loan, you are responsible for the interest from the time the loan is disbursed until it's paid in full. You can pay the interest as you go along. Or, you can allow the interest to accrue (accumulate) - for example, while you're in school you can have the interest added to the principal amount of your loan later. This means the interest will be "capitalized."

Unsubsidized loans are not based on financial need.