Subsidized and Unsubsidized Loans

What’s the difference between subsidized and unsubsidized loans?

• Subsidized — No interest or payments while you are enrolled at least half time (undergraduate students only).
• Unsubsidized — Interest charged while you are enrolled.

Subsidized loan limitations

Subsidized Eligibility Limited to 150% of your Undergraduate Program

• In general, you may not receive Subsidized Direct Loans for more than 150% of the published length of your program. (For example, 150% of a 4-year undergraduate program = 6 years.)

Graduate students are eligible for unsubsidized loans only

Graduate students may borrow only unsubsidized Direct Loans.

• For graduate amounts, the interest begins to accrue once the loan is disbursed. 

Loan Components	Subidized Loan: Based on Financial Need	Unsubsidized Loan: Not Based on Financial Need
Enrollment Requirement	Must enroll at least half time	Must enroll at least half time
Loan Fee	1.057% of the amount borrowed of a loan, where the first disbursement is made on or after October 1, 2021, and before October 1, 2024	1.057% of the amount borrowed of a loan first disbursed on or after October 1, 2021 and before October 1, 2024
Interest Rate: Undergraduate Student	Interest rates are subject to change every July 1 6.533% fixed rate on loans funded on or after July 1, 2024 - June 30, 2025 You will be charged interest once you have completed 150% of your undergraduate program but have not graduated. Read more about this subsidized eligibility limit.	Interest rates are subject to change every July 1 6.533% fixed rate on loans funded on or after July 1, 2024 - June 30, 2025
Interest Rate: Teaching Credential Student	Interest rates are subject to change every July 1 6.533% fixed rate on loans funded on or after July 1, 2024 - June 30, 2025	Interest rates are subject to change every July 1 6.533% fixed rate on loans funded on or after July 1, 2024 - June 30, 2025
Interest Rate: Graduate Student	Note: There are no federally subsidized loans for graduate students	Interest rates are subject to change every July 1 8.083% fixed rate on loans funded on or after July 1, 2024 - June 30, 2025
Capitalized Interest	No interest is charged while enrolled at least half time. If you received a Direct Loan you will be charged interest once you have completed 150% of your undergraduate program but have not graduated. Read more about this subsidized eligibility limit.	Interest is charged from the date the funds are disbursed and capitalizes if not paid.
Credit History	Not required	Not required
Repayment	Begins 6 months (your grace period) after you cease to be enrolled at least half time.	Begins 6 months (your grace period) after you cease to be enrolled at least half time.
Grace Period	A 6-month period before the first payment must be made. Interest accrues and will capitalize if not paid during the grace period of loans borrowed	A 6-month period before the first principal payment must be made. Interest accrues and will capitalize if not paid during the grace period.

Get more info

For detailed information on Subsidized and Unsubsidized Loans, visit the Federal Student Aid website.