Types of Federal Direct Loans

Loan Types

Subsidized Direct Loans

Eligibility for subsidized Direct Loan is based on need. The interest rate for new loans is variable, not to exceed 8.25%. Interest is paid by the federal government while you're in school at least half-time, during the grace period, and during periods of deferment. No payments are required while you're in school, but six months after leaving school, dropping below half-time, or graduating, you must begin making regular monthly payments.

Unsubsidized Direct Loans

Unsubsidized loans are available to all qualified students at participating schools, regardless of their income. As with subsidized Dorect Loan, the interest rate on unsubsidized Direct Loan is variable, capped at 8.25%. Interest payments begin immediately. Although the interest can be deferred and "capitalized", regular loan payments start six months after the borrower ceases to be enrolled at least half-time.