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Direct Loan - Subsidized

  • Award is based on financial need.

Interest Rates

Select the link below to review the most current interest rates:

  • The Department of Education pays the interest for a student borrower who receives a Subsidized loan while they are in school at least half-time, during deferment periods, and during the six months after they leave school. The interest which accrues during the qualifying periods mentioned above is referred to as the interest subsidy. As of July 1 2013, the interest subsidy will be limited to 150% of program length for new borrowers. This means that an undergraduate student working on a four-year degree will be able to borrow Subsidized loans to cover a total of six years of schooling (four years plus an additional 2 years should extra time be needed to graduate). After the sixth year, if they have not completed their program, any subsidized loans received from July 1, 2013 on will lose their subsidy.
  • Grace period refers to the six month period after a student borrower graduates, withdraws or ceases to be enrolled at least half-time. During the grace period before repayment begins, the Department of Education pays the interest accrued on a Direct Subsidized loan. Borrowers who receive Direct Subsidized loans with first disbursements occurring between July 1, 2012 and July 1, 2014 will be responsible for interest which accrues during the grace period. The accrued interest will be added to the loan principal if a borrower chooses not to make payments during the grace period.
  • First-time borrowers who have been offered a Direct Subsidized Loan should complete a master promissory note (MPN) online from the Promissory Notes page.
  • In addition to completing a MPN, first-time Stafford loan borrowers must also complete entrance loan counseling before any loan proceeds can be disbursed. The counseling includes an online tutorial and a quiz. Borrowers should complete entrance loan counseling via the Direct Loan Counseling page.
  • The maximum awards differ by grade level, dependency status, and length of academic program.
  • 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 available.