Unsubsidized loans are student loans that make it possible for students to finance an education while attending a college or university. Students can choose to make interest payments while still in school or capitalize the interest and making payments after they have finished their education. As a rule, interest on an unsubsidized loan begins to accrue as soon as the loan amount is disbursed.
It is possible to obtain an unsubsidized loan from a number of different financial institutions. The student usually has to meet some type of criteria in order to command the best interest rate. However, even students who are considered to be high risk due to the financial condition of the family can usually obtain an unsubsidized loan carrying a higher rate of interest.
An unsubsidized loan does not provide some of the advantages of a subsidized loan. With subsidized loans, the interest is covered by the federal government prior to the commencement of repaying the loan balance. This arrangement means that the student does not have to be concerned about interest payments while still in school or deal with capitalized interest after graduation.
Still, an unsubsidized loan may be the best option for some students. This is particularly true if the grade point average is not high enough to meet the qualifications for a subsidized loan. In addition, the student may not meet the conditions of financial need associated with a subsidized loan. Since the requirements for obtaining an unsubsidized loan are less stringent, students whose families have an annual income too high to qualify for subsidized loans can still obtain an unsubsidized loan to help manage educational expenses.
Applying for an unsubsidized loan is a relatively simple process. Many colleges and universities will assist students in finding loans of this type and helping with the application process. There are also many banks, credit unions, and loan companies that feature a student loan program that is composed of several different unsubsidized loan options.
Care should be taken to evaluate any subsidized loan program before accepting the loan. There is a great deal of variance among different programs, making it necessary to compare several different options before making a formal application. While loans of this type do not include the same benefits as unsubsidized loans, it is possible to find several unsubsidized loan programs that have competitive interest rates and do allow for some degree of flexibility in the repayment terms.