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Direct Subsidized Loan, also known as Subsidized Stafford Loan, is a federal student loan available for undergraduate students who demonstrate financial need. The loan comes with a fixed-rate interest and does not accumulate interest during deferment periods or if you are in school at least half-time. The loan amount is determined by the difference between the cost of attendance and expected family contribution and other financial assistance, such as grants or scholarships.
In addition to demonstrating financial need, you should meet other requirements to be eligible for the Direct Subsidized Loan, such include:
You must file a Free Application for Federal Student Aid (FAFSA) form to apply for a Federal Subsidized Loan. While filing the FAFSA form, you must provide details regarding your income and assets and those of your parents. The school then uses the FAFSA to determine how much you are eligible to borrow.
Undergraduate Annual Loan Limit | Dependent Students | Independent Students |
First year | $5,500 (Up to $3,500 Sub) | $9,500 (Up to $3,500 Sub) |
Second year | $6,500 (Up to $4,500 Sub) | $10,500 (Up to $4,500 Sub) |
Third, Fourth, Fifth year | $7,500 (Up to $5,500 Sub) | $12,500 (Up to $5,500 Sub) |
Undergraduate aggregate loan limits | $31,000 (Up to $23,000 Sub) | $57,500 (Up to $23,000 Sub) |
You can repay subsidized loans after you graduate. However, you need not make any payments during the six-month grace period after graduation. The loan servicer will place you on the Standard Repayment Plan when the loan enters its repayment phase. But if you wish to opt for the different repayment plan, you can place a request and choose a desired plan.
The Direct Subsidized Loan interest rates are fixed and do not change over the life of the loan.
The interest rates for Direct Subsidized Loan first disbursed on or after July 1, 2021, and before July 1, 2022, is 3.73%.
The fee on the loan is 1.057% for loans borrowed through September 30, 2021, which is deducted from each loan disbursement. Therefore, you can ask the college financial aid office to increase the loan amount to the annual loan limit to cover the fees.
The U.S. Department of Education pays the interest on a Direct Subsidized Loan in the following circumstances:
Note that the federal government does not pay the interest on loans during periods of forbearance.
If the student is a first-time borrower on or after July 1, 2013, there is a limit on the maximum period to receive the loans. If this limit applies to you, you cannot receive the loan for more than 150 percent of the program’s published length.
Federal Student Aid
Federal Student Loan
Federal Scholarships
Federal Student Grants