loans
DIFFERENCE BETWEEN A FEDERAL DIRECT Subsidized AND Unsubsidized STUDENT 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 a student based on his or her financial need.
The federal government pays the interest on behalf of a Federal Direct Subsidized Student Loan borrower under certain conditions:
- For Federal Direct Subsidized Loans first disbursed prior to July 1, 2012 the federal government will pay the borrowers interest if borrower is enrolled at least half-time, has obtained an authorized deferment, or is in his or her loan’s six-month grace period.
- New: For Federal Direct Subsidized Loans first disbursed on or after July 1, 2012 and before July 1, 2014 the federal government will no longer pay the interest during the loan’s six month grace period, per the federal government’s Consolidated Appropriation Act of 2012. The federal government will, however, still pay the interest for the borrower if he/she is enrolled at least half-time or has obtained an authorized deferment.
For periods of enrollment prior to July 1, 2012 undergraduate, graduate, and professional students may qualify for a Federal Direct Subsidized Loan if all eligibility criteria such as financial need are met.
- New: For periods of enrollment on or after July 1, 2012, graduate and professional students no longer qualify for a Federal Direct Subsidized Loan per the federal government’s Budget Control Act of 2011.
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.
For more details, review loan limits.