A subsidized loan is a type of financial aid designed to help students pay for their education. With this loan, the government covers the interest while the borrower is in school, during the grace period, and during any deferment periods. This means that the total amount owed does not increase while the student is not making payments.
These loans are typically offered to undergraduate students who demonstrate financial need, as determined by the Free Application for Federal Student Aid (FAFSA). By reducing the financial burden, subsidized loans make it easier for students to focus on their studies without worrying about accumulating interest.