Students who demonstrate financial need are eligible for a Subsidized Direct Loan. Unsubsidized Direct Loans are available to students who do not demonstrate financial need for the Subsidized Direct Loan. Repayment on the subsidized loan begins six months after graduation and no interest is charged during college enrollment. Repayment of principal and interest begins six months after a student ceases to be enrolled at least half-time. All applications for Federal Direct Loans are processed by the Office of Financial Assistance, which certifies the amount and type of Direct Loan for which a student is eligible and sends promissory notes to eligible students.
Interest rates are the same for both subsidized and unsubsidized loans.
The rate is variable and is equal to the rate of the 91-day Treasury Bill plus 1.7 percent during a school grace and deferment periods, and 2.3 percent during repayment, capped at 8.25 percent. Interest is set annually in July for the following academic year. Congress has legislated deferment and cancellation provisions for federal loan borrowers who participate in volunteer service programs. Deferments are available to recipients of Federal Perkins and Federal Direct Loans. Federal Perkins Loan recipients may obtain partial cancellation of their debt for volunteer services.