Direct Subsidized Loans and Direct Unsubsidized Loans are federal student loans offered by the U.S. Department of Education (ED) to help eligible students cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school.
(You might see Direct Subsidized Loans and Direct Unsubsidized Loans referred to as Stafford Loans or Direct Stafford Loans, but these aren’t the official loan names.)
What’s the difference between Direct Subsidized Loans and Direct Unsubsidized Loans?
In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.
Who can get Direct Subsidized Loans?
Direct Subsidized Loans are available to undergraduate students with financial need.
How much can you borrow?
Your school determines the amount you can borrow, and the amount may not exceed your financial need.
Who will pay the interest?
The U.S. Department of Education pays the interest on a Direct Subsidized Loan
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while you’re in school at least half-time,
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for the first six months after you leave school (referred to as a grace period*), and
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during a period of deferment (a postponement of loan payments).
Who can get Direct Unsubsidized Loans?
Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need.
How much can you borrow?
Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.
Who will pay the interest?
You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods.
Good to know
If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan).
How much can I borrow?
Your school determines the loan type(s), if any, and the actual loan amount you are eligible to receive each academic year. However, there are limits on the amount in subsidized and unsubsidized loans that you may be eligible to receive each academic year (annual loan limits) and the total amounts that you may borrow for undergraduate and graduate study (aggregate loan limits). The actual loan amount you are eligible to receive each academic year may be less than the annual loan limit. These limits vary depending on
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what year you are in school and
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whether you are a dependent or independent student.
If you are a dependent student whose parents are not eligible for a Direct PLUS Loan, you may be able to receive additional Direct Unsubsidized Loan funds.
The following chart shows the annual and aggregate limits for subsidized and unsubsidized loans.
