Final answer:
A federal student loan with a variable rate has a fluctuating interest rate based on market conditions, while a fixed-rate loan's interest remains the same throughout the life of the loan. A variable rate can result in lower payments if inflation decreases. Subsidized loans have interest paid by the government in certain conditions, unlike unsubsidized loans.
Step-by-step explanation:
The primary difference between a federal student loan with a variable interest rate and one with a fixed interest rate is that the former has an interest rate that can fluctuate over time with market conditions, while the latter maintains the same interest rate throughout the life of the loan.
For example, if there is an unexpected 3% fall in inflation, a variable-rate loan would likely see a decrease in the interest rate, potentially lowering the monthly payments for the borrower. This is contrasted with a fixed-rate loan, where the interest payments remain constant regardless of changes in inflation or market conditions.
Grants and loans are different forms of financial aid; grants do not need to be repaid, while loans do. Subsidized loans are need-based and the government pays the interest while the student is in school or during a deferment period, while unsubsidized loans accrue interest from the time the loan is disbursed.