What is the difference between Direct Subsidized and Direct Unsubsidized Loans?

• Direct Subsidized means that interest, which accrues on a loan, while a borrower is in school, grace, or authorized periods of deferment, is paid by the government.
• Direct Unsubsidized means that the borrower is fully responsible for paying the interest that accrues on the loan. Interest on an Unsubsidized Loan accrues from the date of disbursement and continues throughout the life of the loan.

Therefore it is more beneficial to a borrower to have a Subsidized Loan but there are more rigid eligibility requirements to qualify for a Subsidized Loan.