The Impact of Loan Types on Restarting Student Debt Payments
As the pandemic-era pause on student loan payments and interest comes to an end, the difference between subsidized and unsubsidized loans becomes apparent. Subsidized loans do not accrue interest while the borrower is in school or during deferment, with the U.S. Department of Education covering the interest. On the other hand, unsubsidized loans start accruing interest immediately, making them more expensive. The payment pause and interest waiver, which cost the government $5 billion a month, will end on September 1, and borrowers are advised to consider income-driven repayment plans rather than deferment or forbearance.