What is the difference between subsidized and unsubsidized loans?

What is the difference between federal subsidized and unsubsidized loans?

• i have an issue. i was offered $4,500 for federal unsubsidized loan for 07-08 fall semester (i'm going to be a sophomore in college). for 06-07, i got a subsidized loan. what is the difference? and are there pros and cons in me taking the $4500 for next semester? and are there going to be a lot of payment for me to pay off when i graduate from college?

• Answer:

  to add to what the previous poster said, the subsidized stafford loan is a need-based loan. you can't just choose to borrow that loan if you are not eligible for it. if you were offered the subsidized loan last year but are now being offered the unsubsidized loan, this tells me probably one of the following happened: your EFC increased over last year or your college charges are lower than they were last year. regardless of what type of stafford loan you have been offered (sub or unsub) it's still a loan with one of the lowest interest rates out there, at 6.8%. the only lower one right now is the perkins loan, but each school has their alloted amount, -and it is also need-based, so you wouldn't be eligible for it.