Federal Direct Subsidized Loan

Federal Direct Subsidized Loans are need-based loans offered to eligible undergraduate students. The government pays interest on the loan while a student is in school at least half-time, during the grace period, and during deferment periods. This is referred to as the interest subsidy.  (Subsidized loans disbursed between July 1, 2012, and June 30, 2014, are not eligible for the six-month grace period; interest will begin to accrue on those loans as soon as the borrower is no longer enrolled at least half-time).

• First-time borrowers who have been offered a Direct Subsidized Loan need to complete a Master Promissory Note (MPN).
• First-time loan borrowers must also complete entrance loan counseling before any loan proceeds can be disbursed.
• Repayment begins 6 months after the borrower graduates, leaves school, or drops below half-time status.
• Repayment may be deferred or modified under certain conditions. There are several repayment plans.
• The amount an undergraduate can borrow is based on the estimated cost of attendance, other financial aid received, grade level, and the aggregate limits established by the federal government.

Find additional information on Federal Direct Loans at the U.S. Department of Education website.