Direct Subsidized Loans offer an interest benefit where the government will pay any interest that accrues during periods of deferment.
Eligible Borrowers
To qualify, students must show financial need. Students must also be U.S. citizens or eligible non-citizens and be enrolled at least half-time in a qualifying program.
As of July 1, 2012, graduate students can no longer qualify for Direct Subsidized Stafford Loans. Graduate students can still qualify for Direct Unsubsidized Loans.
Repayment Terms
- While in school, the government will pay the interest that accrues on the loans.
- Loans enter repayment 6 months following the borrower’s graduation, withdrawal, or if the borrower drops to less than half-time enrollment.
- During the 6-month grace period, the government will pay any interest that accrues on the loans, with the exception of subsidized loans with a first disbursement on or after July 1, 2012, and before July 1, 2014.
- In some circumstances, the borrower can qualify for a deferment where loan payments are postponed for a period of time. During deferment, the government will pay any interest that accrues on the loans.
- A borrower may be able to request a forbearance to temporarily stop payments. During forbearance, however, interest will continue to accrue, and any unpaid interest will be capitalized.
- Upon entering repayment, loans are set to a Standard 10 year repayment term. Borrowers can switch to an alternative repayment plan if necessary.
- There are no prepayment penalties for borrowers who choose to pay off their loans ahead of time.
Current Interest Rate
| Direct Subsidized Loans first disbursed on or after 7/1/2013 and before 7/1/2014 | 3.86% |
| Direct Subsidized Loans first disbursed on or after 7/1/2014 and before 7/1/2015 | 4.66% |