What is the difference between the Subsidized and Unsubsidized Stafford?
The Subsidized Stafford is interest-free to the student while he/she is in school, during the period the loan is in grace, and during periods of deferment (see Glossary). The Unsubsidized Stafford starts to accrue interest when the loan is made and continues to accrue interest during the life of the loan.
Do I have to pay the interest on the Unsubsidized Stafford while I'm in school? You are not required to make interest payments while in school. Any unpaid interest will be capitalized, or added to the principal loan balance, when repayment starts.
I've been offered an Unsubsidized Stafford as part of my award. Can I change it to a Subsidized Stafford?
No, although you are free to decline any loan, or any portion of any loan. The Subsidized Stafford Loan is based on family income information, whereas the Unsubsidized is not need-based, and a student eligible for one loan type is not necessarily eligible for the other. The financial aid office is required to offer you the maximum subsidized amount before offering you an unsubsidized loan.