While you are attending school and meet the eligibility criteria, the interest on this loan is paid by the U.S. government. No payment on the principal balance of the loan is necessary so long as the student remains half time (six credit hours undergraduate and five credit hours graduate).
The interest rate may vary depending on if you are an undergraduate or graduate student. Yearly loan amounts you may borrow may vary depending on the following:
- Your credit hours enrolled per semester
- Your class standing (freshman, sophomore, junior, senior, or graduate student)
- Whether the FAFSA form considers you a dependent or independent student
- The Consolidated Appropriations Act of 2012 mandated Federal Direct Subsidized loan interest to begin accruing during the six-month grace period for all undergraduate subsidized loans originated from July 1, 2012 through June 30, 2014. Subsidized loans originated and disbursed prior to July 1, 2012 are exempt from the Consolidated Appropriations Act.
The Department of Education's Direct Loan Servicing Center is the holder of this loan when a student goes into repayment.