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Subsidized and Unsubsidized Loans

What’s the difference between subsidized and unsubsidized loans?

  • Subsidized — No interest or payments while you are enrolled at least half time (undergraduate students only).
  • Unsubsidized — Interest charged while you are enrolled.

Subsidized loan limitations

Subsidized Eligibility Limited to 150% of your Undergraduate Program

  • If you borrowed a Direct Loan for the first time on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years, not units completed) that you can receive Subsidized Direct Loans.
  • In general, you may not receive Subsidized Direct Loans for more than 150% of the published length of your program. (For example, 150% of a 4-year undergraduate program = 6 years.)

Graduate students eligible for unsubsidized loans only

As of July 1, 2012, graduate students may borrow only unsubsidized Direct Loans.

  • For graduate amounts, the interest begins to accrue once the loan is disbursed.
  • The federal interest subsidy continues to apply to subsidized loan amounts borrowed before July 1, 2012. 

Federal Direct Student Loans: Subsidized and Unsubsidized

Loan Components
Subidized Loan:
Based on Financial Need
Unsubsidized Loan:
Not Based on Financial Need
Enrollment Requirement Must enroll at least half time Must enroll at least half time
Loan Fee 1.059% of the amount borrowed of a loan first disbursed on or after October 1, 2020

1.059% of the amount borrowed of a loan first disbursed on or after October 1, 2020

Interest Rate:
Undergraduate Student

Interest rates are subject to change every July 1

2.75% fixed rate on loans funded on or after July 1, 2020 - June 30, 2021

If you received your first Direct Loan after July 1, 2013, you will be charged interest once you have completed 150% of your undergraduate program but have not graduated. Read more about this subsidized eligibility limit.

Interest rates are subject to change every July 1


2.75% fixed rate on loans funded on or after July 1, 2020 - June 30, 2021

 

Interest Rate: Teaching
Credential Student

Interest rates are subject to change every July 1

2.75% fixed rate on loans funded on or after July 1, 2020 - June 30, 2021

 

Interest rates are subject to change every July 1

2.75% fixed rate on loans funded on or after July 1, 2020 - June 30, 2021

Interest Rate:
Graduate Student
Note: There are no federally subsidized loans for graduate students on amounts borrowed after June 30, 2012.

Interest rates are subject to change every July 1

4.30% fixed rate on loans funded on or after July 1, 2020 - June 30, 2021

Capitalized Interest No interest is charged while enrolled at least half time.

If you received your first Direct Loan after July 1, 2013, you will be charged interest once you have completed 150% of your undergraduate program but have not graduated. Read more about this subsidized eligibility limit.
Interest is charged from the date the funds are disbursed and capitalizes if not paid.
Credit History Not required Not required
Repayment Begins 6 months (your grace period) after you cease to be enrolled at least half time.

Begins 6 months (your grace period) after you cease to be enrolled at least half time.
Grace Period A 6-month period before the first payment must be made.

Interest accrues and will capitalize if not paid during the grace period of loans borrowed July 1, 2012 through June 30, 2014.
A 6-month period before the first principal payment must be made.

Interest accrues and will capitalize if not paid during the grace period.

Get more info

For detailed information on Subsidized and Unsubsidized Loans, visit the Federal Student Aid website.

federal student aid: An Office of the US Department of Education