A Federal Direct Subsidized Loan is the U.S. Department of Education’s major form of self-help aid and is available through the William D. Ford Federal Direct Loan Program.
Borrowing & Interest Rates
This loan is awarded to meet financial need after other resources are subtracted or to the annual maximum loan limit, whichever is lower. The interest rate on loans borrowed between July 1, 2020 and June 30, 2021 is 2.75%. The interest rate on loans borrowed between July 1, 2021 and June 30, 2022 is 3.73%. Repayment begins 6 months after you graduate or are no longer enrolled at least half time. The loan origination fee for loans borrowed after October 1, 2020 and before September 30, 2022 will be 1.057%, and will be deducted from your loan at time of disbursement.
Eligibility for the direct loan interest subsidy is limited for new borrowers on or after July 1, 2013. The federal government restricts the period of time for which a borrower may receive subsidized loans, in the aggregate, to 150 percent of the published length of the student’s current educational program. Once the student reaches that limit, he or she may borrow only unsubsidized loans, and interest begins to accrue on the student’s outstanding subsidized loan.
How to Apply
To apply for a Federal Direct Subsidized Loan, you must complete the FAFSA and be enrolled for at least 6 hours per semester. If you’re eligible for a Federal Direct Subsidized Loan, it will be included on your Financial Aid Notification.
How to Accept, Reduce, or Decline Your Loan Offer
You can accept or decline a Federal Direct Subsidized Loan on your electronic Financial Aid Notification by selecting “Accept” or “Decline” in the dropdown box on the Financial Aid Notification Accept/Decline Awards page.
You can reduce your loan by selecting “Accept” in the dropdown box and entering a lower award amount in the “Partial Accept” field. If you wish to request loan changes, you should “Request Changes” on the Financial Aid Notification Information Request page.
A Direct Loan Master Promissory Note and Entrance Counseling session is required for Federal Direct Loans before the loan funds will be disbursed. In most cases, you’ll only be required to complete one master promissory note and one entrance counseling session during your college career.