Federal Direct Subsidized & Unsubsidized Loans

What do subsidized and unsubsidized mean?

There are two types of Federal Direct Loans: subsidized and unsubsidized.

Subsidized loans

Direct Subsidized Loans are available to undergraduate students who demonstrate financial need. If you get a Direct Subsidized Loan, the U.S. Department of Education pays any interest that accrues while you’re enrolled at least half time.

There is a time limit on how long you may receive Direct Subsidized Loans: up to 150 percent of the published length of your program. For example, if you’re enrolled in a four-year bachelor’s degree program, you can receive Direct Subsidized Loans for no more than six years. There are certain situations where you’ll become responsible for paying interest on the loan.

Unsubsidized loans

Direct Unsubsidized Loans are available to both undergraduate and graduate students. You do not need to show financial need to qualify. You’re responsible for paying all interest on the loan.

Learn more differences

Next steps

If you’re a first-time borrower, you must sign an online Master Promissory Note (MPN) agreeing to the loan terms. You’ll also need to complete entrance counseling to help you understand the loans you’re borrowing and the options you’ll have to repay them.

Learn about counseling and the MPN

Repaying Federal Direct Loans

You’ll begin repaying your loans six months after you graduate or drop below half-time status. First, you’ll be asked to complete exit counseling, which will provide you with information on repaying your loans. We’ll send you email with the details when it’s time for you to go through exit counseling.

Learn more about repaying your loans

Apply for a Federal Direct Loan

To be considered for Federal Direct Subsidized and Unsubsidized Loans, all you have to do is complete your FAFSA.

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