what is a unsubsidized loan

An unsubsidized loan is a type of federal student loan available to both undergraduate and graduate students, regardless of financial need. Unlike subsidized loans, the government does not pay the interest on unsubsidized loans while the borrower is in school, during deferment periods, or grace periods. This means that the borrower is responsible for the interest from the time the loan is disbursed until it is paid in full. Unsubsidized loans offer a higher loan limit compared to subsidized loans and are available to a wider range of students, as they are not based on financial need. Its important for borrowers to be mindful of the interest that accumulates and compounds on top of the original loan balance, as unsubsidized loans can become expensive even before entering a repayment period.