Subsidized Direct Student Loans are federally guaranteed loans based on financial need. This loan is only offered to undergraduate students. Interest does not accrue on the loan while you are in school at least half time or during any future deferment periods. Students are not required to start making payments on this loan until six months after they graduate or drop below half-time. This is known as the “grace period.”
Overview of Direct Subsidized Loans (for Undergraduate Students only, if eligible)*
- Direct Subsidized Loans are available to undergraduate students with financial need.
- Your school determines the amount you can borrow and the amount may not exceed your financial need.
- The U.S. Department of Education pays the interest on a Direct Subsidized Loan:
- while you’re in school at least half-time
- for the first six months after you leave school (referred to as a grace period)*
- during a period of deferment (a postponement of loan payments).
- Note: If you receive a Direct Subsidized Loan that is first disbursed between July 1, 2012 and July 1, 2014, you will be responsible for paying any interest that accrues during your grace period. If you choose not to pay the interest that accrues during your grace period, the interest will be added to your principal balance.
- As of July 1, 2018, the 2018-19 interest rate is 5.05 percent.
- Comprehensive information on these loans is available from the U.S. Department of Education.
This website last reviewed/updated on 08/01/18