Students must demonstrate financial need to qualify for subsidized loans. The federal government does not pay interest on unsubsidized loans while the student is in school, during the grace period, or while in deferment.
Interest is charged on the loan from the date on which it is disbursed until it is paid in full.
The interest may be paid on a monthly basis, or allowed to accumulate, in which case it will be capitalized quarterly and added back to the principal amount borrowed. Students may borrow unsubsidized loans regardless of financial need. Parents may also borrow Federal Direct PLUS Loan funds to supplement resources available to their dependent student. Parents who do not have an adverse credit history may borrow up to the total cost of the student's education, less any other aid received by the student. Back to the Frequently Asked Questions page This page was last updated Monday, December 18, 2000.