Loans - Direct Unsubsidized Loans

Level 4 - Highly Selective

Welcome! One of the most important thing that you can do is prepare financially for the cost of higher education.

Whether you will pursue just an associate’s degree or potentially achieve multiple degrees, understanding loans is critical. The reality is that loans are likely to be at least a part of almost any financial aid package that is offered.

In order to help families understand the different types of loans, we want to provide a series on each type of loan.

Before we begin, we want to preface this by saying that no one should pursue loans. At the end of the day, loans are not free money. Loans are money lent today that will need to be repaid with interest later. If you have the opportunity to earn scholarships, grants, or otherwise mitigate the cost of college, you should strongly consider taking it.

We repeat: do not get caught in the prestige of college where you are crushed by debt.

That being said, if you do find yourself needing to take a loan, you need to do so with as much information as possible.

With that being said, we will dive in. For the purpose of this series, we will cover the following loans:

1. Direct Subsidized Loans

2. Direct Unsubsidized Loans

3. Parent Plus Loans

4. Perkins Loans

5. Graduate Plus Loans

6. Direct Consolidation Loans

7. Private Student Loans

8. Private Parent Loans

Today we will focus on Direct Unsubsidized Loans.

Part 1: What are direct unsubsidized loans?

Direct unsubsidized loans are a subset of the direct loans, also known as Stafford loans.

Direct loans means they come directly from the federal government - meaning they are a line item funded by the government and the interest rates are set by federal law.

Unsubsidized loans accrue interest while you are in college, but you are responsible for the interest accrued then. While payments can be deferred until after you graduate or are no longer a full-time student, the interest that accrues ultimately is your responsibility, making unsubsidized loans more expensive than their subsidized counterparts.