Federal Direct Subsidized and Unsubsidized Loan

The Federal Direct Subsidized Loan and the Federal Direct Unsubsidized Loan represent two types of loans made under the Federal Direct Loan Program.

Federal Direct Subsidized Loan

A Federal Direct Subsidized Loan is offered to undergraduate students based on his or her financial need.

The federal government pays the interest on behalf of the borrower of a Federal Direct Subsidized Loan if he or she is enrolled at least half-time or has obtained an authorized in-school deferment.

Limitation of the Federal Direct Subsidized Loan

For first-time borrowers, on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that they can receive Federal Direct Subsidized Loans. This time limit does not apply to Federal Direct Unsubsidized Loans or Direct PLUS Loans.

Students may not receive Federal Direct Subsidized Loans for more than 150 percent of the published length of their academic program. This is called the “maximum eligibility period" and it is based on the published length of a student's current academic program. You can usually find the published length of any program of study in the Kansas State University Academic Catalog.

  • If a student is enrolled in a four-year bachelor’s degree program, the maximum period for which he or she can receive Federal Direct Subsidized Loans is six years (150 percent of 4 years = 6 years). 
  • Because the maximum eligibility period is based on the length of the student's current academic program, the maximum eligibility period can change if the student changes to an academic program that has a different length.
  • If students receive Federal Direct Subsidized Loans for one academic program and then change to another academic program, the Federal Direct Subsidized Loans they received for the earlier program will generally count toward their new maximum eligibility period.
Students become responsible for paying the interest that accrues on their Federal Direct Subsidized Loans when:
  • They are no longer eligible for Federal Direct Subsidized Loans and they stay enrolled in their current academic program.
  • They are no longer eligible for Federal Direct Subsidized Loans, they did not graduate from their prior academic program, and are enrolled in an undergraduate program that is the same length or shorter than their prior academic program.
  • They transferred into a shorter academic program and lost eligibility for Federal Direct Subsidized Loans because they received Federal Direct Subsidized Loans for a period that equals or exceeds their new, lower maximum eligibility period, which is based on the length of the new academic program.

Federal Direct Unsubsidized Loan

A Federal Direct Unsubsidized Loan does not require a student to demonstrate financial need.

  • The student borrower of a Federal Direct Unsubsidized Loan is responsible for paying the interest that accrues on the loan from the time of disbursement.
  • Undergraduate, graduate, and professional students may qualify for a Federal Direct Unsubsidized Loan.