What distinguishes subsidized student loans from unsubsidized loans?

Subsidized student loans are distinctive primarily because the government covers the interest on these loans while the borrower is in school at least half-time, during the grace period, and during any deferment periods. This means that the total amount borrowed does not accrue interest during those times, leading to significant savings for the borrower over the life of the loan.

This feature of subsidized loans makes them particularly beneficial for students who may be concerned about accruing large amounts of debt before they even graduate. The lack of interest increase while in school helps students manage their finances more effectively as they transition into their careers.

In contrast, unsubsidized loans begin accumulating interest as soon as they are disbursed, which can lead to a higher total repayment amount when the borrower graduates or drops below the half-time enrollment threshold. Thus, option C is the key distinguishing factor that sets subsidized loans apart from their unsubsidized counterparts.