Which type of loan requires payment of interest while in school?

Unsubsidized loans are designed specifically for students who need financial assistance when pursuing their education. With unsubsidized loans, interest begins to accrue from the moment the funds are disbursed. This means that students are responsible for paying the interest on these loans while they are still in school.

In contrast, subsidized loans do not accrue interest while the borrower is enrolled in school at least half-time, as the government covers the interest during that period. Federal loans encompass both subsidized and unsubsidized options, meaning not all federal loans require interest payments while in school. Private loans vary widely in terms of their terms and conditions, and many do require interest payments while the borrower is in school, but they are not standardized like federal loans. Therefore, the distinction of unsubsidized loans being specifically those that require interest payments during the academic period makes this choice the most accurate.