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In short the loan's interest charge builds up while the student is in school. So if you took out, say, $1000 in loan, you owe the $1000 + 4% of annual interest, which comes to be roughly $1200. With subsidized loans, the government pays the interest, so you owe only $1000 after the four years of college.
Here’s a quick summary of Direct Unsubsidized Loans: