The correct answer is:
c) an unsubsidized loan starts incurring interest from the moment it is paid out vs a subsidized loan where the federal government pays the interest until 6 months after graduation.
In more detail:
- Subsidized loans (such as Direct Subsidized Loans) are federal loans for which the government pays the interest while the borrower is in school at least half-time, during the grace period, and during deferment periods.
- Unsubsidized loans (such as Direct Unsubsidized Loans) are also federal loans, but interest begins to accrue as soon as the loan is disbursed and continues to accrue during school, grace periods, and deferment. The borrower is responsible for paying all interest that accrues on the loan.