Direct Subsidized Loans are available only to undergraduate students who have financial need. Direct Unsubsidized Loans are available to both undergraduates and graduate or professional degree students. You are not required to show financial need to receive a Direct Unsubsidized Loan.
Direct Subsidized and Direct Unsubsidized Loans (also known as Stafford Loans) are the most common type of federal student loans for undergrad and graduate students. Direct PLUS Loans (also known as Grad PLUS and Parent PLUS) have higher interest rates and disbursement fees than Stafford Loans.
Types of federal student loans
Direct Subsidized Loans. Direct Unsubsidized Loans.
What is an unsubsidized loan? Another type of federal loan is an unsubsidized loan. With a federal unsubsidized loan, you are responsible for the interest from the moment the loan money is disbursed into your account. There's no help on the interest; you're responsible for the whole amount.
Direct unsubsidized loans are loans that help cover the cost of higher education for both undergraduate and graduate or professional students at a four-year college or university, community college, or trade, career, or technical school.
A subsidized loan is your best option. With these loans, the federal government pays the interest charges for you while you're in college.
You can use the National Student Loan Data System (NSLDS) to find out what federal loans you have. As of February 2020, the NSLDS site is found on the Department's StudentAid.gov site.
Subsidized: Interest is paid by the Education Department while you're enrolled at least half time in college. Unsubsidized: Interest begins accruing as soon as the loan is disbursed, including while students are enrolled in school. Subsidized: No payments are due in the first six months after you leave school.
Direct Unsubsidized Loans are available to undergraduate, graduate, or professional degree students enrolled at least half-time at a school that participates in the Direct Loan Program. Financial need is not required to qualify.
A Federal Direct Unsubsidized Stafford Loan is awarded as a non-need-based loan after all other need- based loans, grants, scholarships and other resources are subtracted or up to the annual maximum loan limit, whichever is lower.
The maximum amount you can borrow each academic year in Direct Unsubsidized Loans ranges from $5,500 to $12,500 for undergraduates, depending on your year in school and your dependency status. Direct Unsubsidized Loans have an annual limit of $20,500 for graduate or professional students.
The FAFSA is not a loan. It is an application form. However, you can use the FAFSA to apply for financial aid and federal student loans. The FAFSA, or Free Application for Federal Student Aid, is used to apply for several types of financial aid, including grants, student employment and federal student loans.
For federal student loans, the top of a student loan bill will have the name of your student loan servicer and the name of your federal student loan program. For private student loan bills, you'll see the name of your private lender on the bill instead.
To figure out what type of federal loan you have, look at the promissory note and application. You can also look at the top of your monthly bill – the name of the program should be listed there. If your interest rate is above 8.5% you may have a private loan rather than a federal loan.
Subsidized loans can only be used for undergraduate studies. You must demonstrate a financial need for a subsidized loan. The government does not pay any interest accrued on an unsubsidized loan. Unsubsidized loans have a higher interest rate than subsidized ones.
Our general eligibility requirements include that you have financial need, are a U.S. citizen or eligible noncitizen, and are enrolled in an eligible degree or certificate program at your college or career school. There are more eligibility requirements you must meet to qualify for federal student aid.
Direct Unsubsidized Loans have lower fees and interest rates than PLUS Loans. In fact, the origination fee, or “loan fee” on a Direct Unsubsidized Loan is one-fourth of the fee you'll pay for a PLUS Loan. Direct Unsubsidized Loans aren't credit-based, unlike private student loans.
To qualify, you must make 120 on-time payments meeting the following requirements: Your employment for each month must be with a qualified employer. You must be in an eligible repayment plan. To qualify for PSLF, you must be enrolled in an income-driven repayment plan.
You should accept the subsidized loan first because it has more benefits. If you have to accept an unsubsidized loan, remember that you're responsible for all the interest that accrues on that loan.
Direct Stafford Loans, from the William D. Ford Federal Direct Loan (Direct Loan) Program, are low-interest loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school.