Unsubsidized Federal Direct LoanPage address: http://www.mnsu.edu/campushub/loans/federaldirect/unsub/
The Unsubsidized Federal Direct Loan is considered a NON-NEED based loan. The Unsubsidized Federal Direct Loan is awarded to students who did not have a demonstrated NEED, or whose NEED portion of their budget has been met, but still have room in their overall Cost of Attendance for more funding and have remaining Federal Direct Loan eligibility.
Because the Unsubsidized Federal Direct Loan is considered a NON-NEED based loan, the Federal Government DOES NOT pay the interest while the student is in school. It is the student’s responsibility to pay accrued interest while in school, or choose the option to capitalize the interest.
Capitalization of interest means the accrued interest on the Unsubsidized Federal Direct Loan will be added to the principal balance of the loan. The loan will not go into default due to non-payment of interest while the student is in-school or in grace, but the interest will build and the student will pay interest on interest during repayment. It is suggested that if at all possible, students pay the interest while in school.