What Is a FAFSA Unsubsidized Loan?

If you are awarded a student loan from the government, it will be either subsidized or unsubsidized. A subsidized loan is given based on your need financially. You can also take out a federal unsubsidized loan to cover expenses beyond what the government determines your financial need to be.
  1. FAFSA

    • In order to qualify for an unsubsidized loan, you need to complete the FAFSA, or Free Application for Federal Student Aid, each year you plan to be in school.

    Interest

    • When you are in school, the government pays the interest that accrues on any subsidized loans. However, if you have unsubsidized loans, you are responsible for the interest while you are in school. You can either pay it or allow it build up and be capitalized (that is, added to the loan's principle).

    Types of Loans

    • There are several types of federal student loans. The Stafford loan is for students and the PLUS loan is for parents or graduate students. Both Stafford and PLUS loans are either subsidized or unsubsidized.

    Loan Limits

    • The amount of money that can be loaned to you depends on how far you are into your schooling. First year undergraduate students can borrow up to $5,500 a year and only $3,500 can be subsidized. However, graduate students can borrow up to $20,500, $8,500 of which can be subsidized.

    Benefits of Unsubsidized Loans

    • An unsubsidized federal loan can help you make ends meet while you are in school. Once you leave school, you have a six-month grace period before you must begin repaying the loan. You are still responsible for the interest during the grace period.

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