Federal Direct Subsidized Loan

Federal Direct Subsidized Loans are need-based loans. 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).

  • As of July 1, 2013, the interest subsidy will be limited to 150% of program length for first-time borrowers. A first-time borrower is one who has no principal or interest balance on any Direct or FFEL Loan on the date they receive a Direct Loan on or after July 1, 2013. This means that an undergraduate student working on a four-year degree will be able to borrow subsidized loans for up to six years of schooling. After the sixth year, if they have not completed their program, they will not be eligible for any further subsidized loans, and any subsidized loans received since July 1, 2013, will lose their subsidy. Students who reach the 150% time limit will continue to be eligible for Direct Unsubsidized Loans. Aggregate loan limits still apply.


  • 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.

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

Interest Rates and Origination Fees

Interest rates depend on the loan type and the first disbursement date of the loan. Origination fees of approximately 1% are deducted from each Sububsidized Loan disbursement. Please click here for the most recent information on interest rates and origination fees.