A federal subsidized student loan is considered need-based financial aid, as determined by the FAFSA. The student must have need in the financial aid package to qualify for a subsidized loan. The interest on a subsidized loan is paid by the government while the student is in school and through the six-month grace period.
An unsubsidized student loan begins accruing interest from the time the loan is disbursed. Students may pay the interest on the unsubsidized loan or let it accumulate.