Office of Student Financial Assistance

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 the student is enrolled at least half-time or has obtained an authorized in-school deferment.

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.