Your lists two kinds of federal loans, and the names are almost designed to make your eyes glaze over: subsidized and unsubsidized. But the difference between them is real money, sometimes hundreds or thousands of dollars by the time you graduate.

What 'subsidized' means

With a , the government pays your while you're in school at least half-time, and during certain grace and pause periods. So a $5,000 subsidized loan is still right around $5,000 when you graduate. Your debt isn't quietly growing while you're sitting in class.

What 'unsubsidized' means

With an , interest starts adding up the day the money hits your account and keeps going the entire time, including all four (or more) years you're in school. If you don't pay that interest as it builds, it gets added to your balance, and then you start paying interest on the interest. That's how a loan grows while you're not looking.

Tip
On an unsubsidized loan, even tiny payments while you're still in school help. Putting $25 a month toward the interest keeps it from piling onto your balance, and that's money you'd otherwise pay interest on for years.

Which one you'll be offered

Subsidized loans are , so they go to students whose financial picture shows the need. That's one more reason filling out the FAFSA carefully matters. Unsubsidized loans are available more broadly. If you're offered both, take the subsidized one first; it's simply the better deal.

Subsidized = the government covers interest while you're in school. Unsubsidized = it doesn't, and the clock is already running. Same loan amount, different cost.

There are caps. A undergraduate can borrow $5,500 the first year, $6,500 the second, and $7,500 each year after, but only part of each can be subsidized ($3,500, then $4,500, then $5,500), with the rest unsubsidized. If your aid letter is hard to read, your financial aid office will tell you which of your loans is which. And before you accept anything, Student Loans, Before You Sign has the checklist.