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One of the most important concepts affecting your student loan repayment plan is the difference between subsidized vs. unsubsidized loans. It is important when you’re seeking federal assistance or are in repayment to understand which you qualify for and what you should expect once you receive your loan.

Subsidized loan definition & info for students

The federal government offers subsidized loans based on the student’s financial need when applying for aid through the Free Application for Federal Student Aid (FAFSA). The key components of a subsidized student loan (and the biggest benefits) are:

  • The U.S. Department of Education pays for any interest accrued while you are in school. To receive this benefit, you must be enrolled at least halftime.
  • You’ll also get a six-month grace period after graduation, meaning that any interest that accrues during your college career and six months afterward, is completely paid for.

When the grace period ends, though, you are required to make monthly payments of principal and interest. Unfortunately, subsidized loans are only available to undergraduate students. You can also take advantage of this benefit if you choose to defer your student loans, however, if you wish to put your loans in forbearance interest will still accrue on a subsidized loan.

Unsubsidized student loans, on the other hand, begin accruing interest from the date of your first loan disbursement, though you’re not required to pay that interest until you finish school. When you graduate, the amount of money that accrued during your education is simply added to the principal loan amount and you begin paying off that new amount.

One benefit to taking out a federal unsubsidized loan is that you are not required to demonstrate financial need so the amount you can take out is much higher than a subsidized student loan. Additionally, unsubsidized federal student loans are available for both undergraduate and graduate students.

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Subsidized vs. unsubsidized loans: which is for you?

Federal subsidized and unsubsidized direct federal loans for undergraduates carry the same low, fixed interest rate, so it is generally a good idea to take out a subsidized loan before taking on additional debt with an unsubsidized loan.

If you are planning on going back to school, subsidized loans can help save a lot of money in deferment since interest will not accrue.

Private loans

If you do not have a choice because of your lack of financial need or because you are attending graduate school, your next option is to choose between a federal unsubsidized loan, a federal PLUS loan, or a private student loan.

Rates on all newly-issued federal loans are set to increase on July 1, 2017. Borrowers who are only eligible for federal PLUS loans or unsubsidized direct loans for graduate students may qualify for better rates from private lenders — particularly if they have a cosigner. Many private lenders now offer loans that are competitive with federal PLUS loans, which carry a 4.272 percent up-front disbursement fee that’s not charged by private lenders.

We’ve compiled our most trusted lending partners in the table below. Private loans could make sense for you – and with Credible you can cover 100% of your school-certified costs and finance almost any degree with one simple process. Compare rates from our vetted lenders and pick the option that fits you best:

LenderRatesLoan Term (years) 
citizens

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Fixed: 5.25%+¹
Variable: 3.24%%+¹
5, 10, 15¹Get Offers
Loan products
• Undergraduate, graduate, and parent loans
• Fixed and variable interest rates

Loan amounts
• $1,000 up to $170,000

Eligibility
• Must be a U.S. citizen or permanent resident
• Must be enrolled at least half-time in a degree-granting program at an eligible institution
• International students can apply with a creditworthy U.S. citizen or permanent resident co-signer
collegeave

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Fixed: 6.22%+
Variable: 3.69%+
8, 10, 12, 15Get Offers
Loan products
• Undergraduate and graduate loans
• Fixed and variable interest rates

Loan amounts
• $2,000 up to 100% of your school-certified cost of attendance

Eligibility
• Available to all US residents that attended an eligible undergraduate or graduate school
• Students with little or no credit history will benefit from having a creditworthy co-signer
connext

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Fixed: 5.40%+
Variable: 3.05%+
10, 15Get Offers
Loan products
• Undergraduate and graduate loans
• Fixed and variable interest rates

Loan amounts
• Undergraduate: $2,000 up to $500,000
• Graduate: $2,000 up to $150,000, $200,000 for an MBA/Law Degree, and $250,000 for a Medical/Pharmacy Degree

Eligibility
• Must be a U.S. citizen or permanent resident
• Student must be admitted to or enrolled at least half-time at an eligible institution when applying
• must meet credit criteria, or add a cosigner who meets the cosigner requirements
discover

View details
Fixed: 6.49%+
Variable: 4.37%+
15, 20Get Offers
Loan products
• Undergraduate and graduate loans
• Fixed and variable rates

Loan amounts
• Up to 100% of your school-certified tuition, housing, books and more, up to aggregate loan limits

Eligibility
• Must be a U.S. citizen or permanent resident
• Must be enrolled at least half-time in a degree-granting program at an eligible institution
• Must be making satisfactory academic progress as defined by your school

More details about Discover student loans
ihelp

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Variable: 3.77%+20Get Offers
Loan products
• Undergraduate and graduate loans
• Variable rates only

Loan amounts
• Undergraduates: $1,000 ($3,000 for Georgia residents) up to $100,000
• Graduates: $1,000 ($3,000 for Georgia residents) up to $150,000

Eligibility
• Must be a U.S. citizen or permanent resident
• Borrower or cosigner must have at least 3 years of positive credit history and annual income of $18,000 or greater
• Must be enrolled at least half time in an iHELP eligible school
invested

View details
Fixed: 4.37%+
Variable: 2.45%+
5, 10, 15Get Offers
Loan products
• Undergraduate and graduate loans
• Fixed and variable rates

Loan amounts
• $1,001 up to 100% of your school-certified cost of attendance

Eligibility
• Only available to all Indiana residents and available to all US residents attending an eligible Indiana school
• vailable to all Indiana residents and available to all US residents attending an eligible Indiana school
raise

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Variable: 5.08%+5, 7, 10Get Offers
Loan products
• Undergraduate and graduate loans
• Variable rates only

Eligibility
• The raise^ private student loan program is available only to students with a permanent residence in Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, South Carolina, Tennessee, Texas, Washington or West Virginia and cosigners in any state except Wisconsin
• Must be a U.S. citizen or permanent resident
• Must be earning income (or apply with a cosigner who is)
• Available to students enrolled at least half-time at an eligible institution


View details
Fixed: 5.74%+
Variable: 3.25%+
5-15Get Offers
Loan products
• Undergraduate, graduate, and parent loans
• Fixed and variable interest rates

Loan amounts
• Up to 100% of the school-certified cost of attendance

Eligibility
• Must be a US Citizen or Permanent Resident
• Non-U.S. citizen students, including DACA students, are eligible to apply with a creditworthy cosigner who is a U.S. citizen or permanent resident with required U.S. Citizenship and Immigration Service (USCIS) documentation. Please visit SallieMae.com for more information
• Available to students enrolled full-time, half-time, and less than half-time

More details about Sallie Mae student loans

¹Citizens Bank Disclosures | raise^ Repayment Examples

Learn more

Here are some articles with more detailed information on taking out and repaying federal direct subsidized and unsubsidized loans, PLUS loans, and private student loans.

Credible is a multi-lender marketplace that allows borrowers to get personalized rates and compare student loans from vetted lenders.

 

¹Citizens Bank Student Loan Eligibility:

Borrowers must be enrolled at least half-time in a degree-granting program at an eligible institution. Borrowers must be a U.S. citizen or permanent resident or an international borrower with a creditworthy U.S. citizen or permanent resident co-signer. For borrowers who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify or discontinue these benefits at any time. Any changes to these benefits will not affect loans issued prior to the change date. Rates subject to change. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, and – if applicable – self-certification form, school certification of loan amount, and student’s enrollment at a Citizens Bank- participating school. Please Note: International Students are not eligible to receive an offer for the Multi Year Borrowing Option.

Citizens Bank Undergraduate Rate Disclosure:

Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2017, the one-month LIBOR rate is 1.34%. Variable interest rates range from 3.24% – 11.34% (3.24% – 11.24% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 5.74% – 11.99% (5.74% – 11.90% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens One is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.

Citizens Bank Graduate Rate Disclosure:

Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2017, the one-month LIBOR rate is 1.34%. Variable interest rates range from 3.24% – 10.99% (3.24% – 10.89% APR) and will fluctuate over the term of your loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 5.74% – 11.75% (5.74% – 11.45% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens One is required to provide every potential borrower with disclosure information before they apply for a private student loan. You will be presented with an Application Disclosure and an Approval Disclosure within the application process before you accept the terms and conditions of your loan.

Citizens Bank Business/Law Rate Disclosure:

Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2017, the one-month LIBOR rate is 1.34%. Variable interest rates range from 3.24% – 10.09% (3.24% – 9.84% APR) and will fluctuate over the term of your loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 5.25% – 10.99% (5.25% – 10.75% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens One is required to provide every potential borrower with disclosure information before they apply for a private student loan. You will be presented with an Application Disclosure and an Approval Disclosure within the application process before you accept the terms and conditions of your loan.

Citizens Bank Medical/Dental Rate Disclosure:

Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2017, the one-month LIBOR rate is 1.34%. Variable interest rates range from 3.24% – 9.59% (3.24% – 9.40% APR) and will fluctuate over the term of your loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 5.25% – 10.49% (5.25% – 10.26% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens One is required to provide every potential borrower with disclosure information before they apply for a private student loan. You will be presented with an Application Disclosure and an Approval Disclosure within the application process before you accept the terms and conditions of your loan.

Citizens Bank Loyalty Discount Disclosure:

The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.

Citizens Automatic Payment Disclosure:

Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Benefit is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this benefit.

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