What is a Federal Direct Subsidized Loan?

A Federal Direct Subsidized Loan is a type of student loan that the federal government pays the interest on the loan while the student is in school, during the six-month grace period after graduation and during any deferment periods.  As of July 1, 2012, this loan is only available to undergraduate students due to changes in federal legislation.  The amount an undergraduate student can borrow is based on their grade level.  The maximum annual amounts are as follows:  $3,500 for freshmen; $4,500 for sophomores.  $5,500 for juniors and seniors.  The interest rate on the Federal Direct Subsidized Loan is 2.75% for 2020-2021 academic year loans first disbursed on or after July 1, 2020 through June 30, 2021.  There is also a 1.057% origination fee that is deducted from the loan proceeds.  To receive this loan, first-time borrowers must complete a Student Loan Master Promissory Note (MPN) at studentloans.gov as well as an Entrance Counseling session at studentloans.gov.


Article ID: 52761
Thu 4/26/18 11:24 AM
Thu 10/1/20 8:59 AM