How are these two types of federal loans different? How will their differences affect you as a borrower?
Subsidized means the federal government will pay the interest on the borrower’s behalf while the borrower is enrolled in school; the federal government does not pay the interest on unsubsidized loans. During that time the borrower can choose to make quarterly interest payments or to capitalize the interest.The maximum amount you can borrow each year in direct subsidized and unsubsidized loans depends on your grade level and on whether you are a dependent student or an independent student. Consult Types of Aid for more information.