The borrower becomes responsible for payment of the interest following periods of enrollment or deferment. Unsubsidized means that the federal government does not pay the interest to the lender, as they do with the subsidized Stafford Loan. The interest rates on these private educational loans are variable, with most programs having interest rates tied to the 91-day U.S. Treasury bill. There is no interest rate maximum limit applied to any of these loans, making borrowing from these loans a riskier financial option than borrowing from those with an interest rate maximum. Payment of the interest is the borrower's financial responsibility.
Interest begins to accrue upon disbursement of the loan.
Although student borrowers are encouraged to pay the interest payments when financially possible, both principal and interest may be deferred while the student is enrolled as a full-time student and, depending on the specific loan program, during a period of residency training as well. You should compare the various alternative loans available, selecting the loan with the most favorable terms. Also, you may want to select a lender through which you can borrow all three loans, your Stafford, Unsubsidized Stafford, and alternative loans. A credit history review performed by the lender is required for approval. About Institutional Aid Programs .