What are Subsidized and Unsubsidized Federal Direct Stafford Loans?

The interest on the Subsidized loan is paid by the government while you are in school. The interest on the Unsubsidized loan is not paid by the government while you are in school, and you have the option of paying the interest during enrollment or having it deferred until after you graduate, at which time it will be added to the principal of the loan in a process called capitalization. Keep in mind that as of July 1st, 2012, only undergraduate students will be eligible for Subsidized loans.

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