A loan given to undergraduate students (with financial need) where the interest does not accrue while the student is enrolled at least half-time or during deferment periods.
Example: If a student is given a $10,000 for their freshman year at a 6.5% interest rate then at the end of 4 years there is still only a $10,000 principal amount. For an unsubsidized loan interest accrues and then gets added on to the principal amount (if unpaid). For our example the new principal amount would have increased to $12,080 and then you will have to pay the 6.5% on that new principal amount (basically paying interest on interest).
