How do direct subsidized loans work

How much you can borrow. Education Department pays interest. Interest accrues. Who can borrow. Undergraduate students only. Subsidized vs. Who can borrow loans.

Maximum eligibility period. Loan qualifications. Loan limits. Interest rates. How interest accrues on subsidized and unsubsidized loans. While in school. Grace period. During deferment. How to get subsidized and unsubsidized loans. Capitalizing the interest will increase the amount you have to repay. The maximum amount you can borrow each academic year depends on your grade level and dependency status.

See the chart below for annual and aggregate lifetime borrowing limits. You may not be eligible to borrow the full annual loan amount because of your expected family contribution or the amount of other financial aid you are receiving. To see examples of how your Subsidized or Unsubsidized award amount will be determined. Learn more differences. Learn more about repaying your loans. Looking for a loan? Discover more loan types.

Anything leftover is refunded to you. Only undergraduates who demonstrate financial need can access a Direct Subsidized Loan. You cannot be in default on any other federal student loans.

You must also:. Not every institution participates in the Direct Loan Program, so check to be sure that yours does. One of the advantages of this type of borrowing is the flexibility of the repayment options.

Your loan servicer will contact you as soon as you take out your loan and will maintain regular contact over the life of the loan.