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Both Direct Subsidized Loans and Direct Unsubsidized Loans are low-interest federal student loans that can help you pay for the costs of college or career school. But before you accept either one, it’s important that you understand how they’re different so you can make the best choices for your situation.
Direct Subsidized Loans and Direct Unsubsidized Loans are federal student loans offered by the U.S. Department of Education (ED) to help eligible students cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school.
The Federal FFELP and Direct (Subsidized and Unsubsidized) Loan has interest rates well below average and special repayment schedules. The money you borrow must be used for school costs including tuition, fees, books, supplies, and room and board.
Unsubsidized Loan. An unsubsidized loan borrowed through the Direct Loan Program offers undergraduate, graduate, and professional students a low, fixed interest rate and flexible repayment terms. You don’t need to show financial need to qualify.
The student’s parent (s) will be required to provide their information on the Free Application for Federal Student Aid (FAFSA ®) form. If you select “Yes,” a financial aid administrator at the student's school will determine their eligibility for a Direct Unsubsidized Loan only.
There are two types of Direct Loans: subsidized and unsubsidized. The interest on subsidized loans is paid by the government while you're still in school. Meanwhile, you are responsible for paying the interest that accrues on unsubsidized loans while you’re in school.
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Repayment for a FFELP Stafford and Direct Subsidized or Unsubsidized student loan begins six months after you graduate, drop below half-time enrollment, or withdraw from school.
Loan types include Direct Subsidized, Direct Unsubsidized, Direct Parent PLUS, Direct Graduate Student PLUS (GradPLUS) loans, and Direct Consolidation loans. These student loans have low interest rates and flexible repayment terms.
Unsubsidized Loans begin accruing interest as soon as the loan is disbursed. Subsidized Loans* disbursed before July 1, 2012 begin accruing interest when your grace period expires. Subsidized Loans* disbursed between July 1, 2012 and June 30, 2014** begin accruing interest when you stop attending school at least half-time.