Federal Direct and Federal Direct Plus Loans
Direct Subsidized Loan – Available to undergraduate students that demonstrate financial need. The U. S. Department of Education pays the interest on this loan (subsidized):
- while you are in school at least half-time,
- for the first six months after you leave school (referred to as a grace period), and
- during a period of deferment (a postponement of loan payments)
Direct Unsubsidized Loan – Available to undergraduate students, but does not require financial need to be demonstrated for eligibility. The student is responsible for paying the interest on an unsubsidized loan during all periods. If you chose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principle amount of your loan).
What is the difference between a subsidized and an unsubsidized loan?
Direct Plus Loan – Available to dependent undergraduate students but does not require financial need to be demonstrated for eligibility. The application can be submitted via www.studentloans.gov using the FAFSA credentials to access the application. The borrower must not have negative credit history and will be responsible for interest during all periods with payments starting immediately upon signing the MPN. The maximum amount is the cost of attendance minus any other financial aid a student receives. NOTE: All direct loans assess a loan fee where the amount of the fee varies depending on when the loan is disbursed. The unsubsidized and parent plus loans interest rate varies depending on the loan period of disbursement. For interest rates, loan fees charts, and the 150% Limit on Subsidized Loans please visit StudentAid.gov.
For more information on the 150% Limit on Subsidized Loans, please visit the Subsidized Direct Loan information page on www.studentaid.gov and the explanation sheet from the Department of Education.