An unsubsidized loan is characterized by which of the following?

An unsubsidized loan is characterized by which of the following?

• A. Interest accrues and borrowers are responsible from disbursement
• B. No interest accrues until after graduation
• C. It requires a government cosigner
• D. It is limited to undergraduate students

Answer: (A)

Unsubsidized loans require the borrower to pay interest from the moment the funds are disbursed. The lender does not cover any interest during school, grace periods, or deferment, so interest accrues and the borrower is responsible for paying it or having it added to the loan principal (capitalization). This is why the description that interest accrues and borrowers are responsible from disbursement is the best fit. The idea that no interest accrues until after graduation describes subsidized loans, not unsubsidized ones. There is no government cosigner requirement for federal unsubsidized loans, and these loans aren’t limited to undergraduate students—graduate students can borrow them too.

Unsubsidized loans require the borrower to pay interest from the moment the funds are disbursed. The lender does not cover any interest during school, grace periods, or deferment, so interest accrues and the borrower is responsible for paying it or having it added to the loan principal (capitalization). This is why the description that interest accrues and borrowers are responsible from disbursement is the best fit. The idea that no interest accrues until after graduation describes subsidized loans, not unsubsidized ones. There is no government cosigner requirement for federal unsubsidized loans, and these loans aren’t limited to undergraduate students—graduate students can borrow them too.