Direct Loans: Offered by the federal government or a third-party lender, Direct Loans can be subsidized or unsubsidized.
- Subsidized loans The Department of Education pays the interest:
- While you are enrolled at least half time
- First six months after you leave school (grace period)
- During a period of deferment
- Unsubsidized loans You are responsible for paying interest on this loan during all periods. Students may choose to pay interest while attending school so that it doesn’t increase the principal balance.
The interest rate for undergraduate students whose subsidized or unsubsidized Direct Loan is disbursed on or after July 1, 2018 through July 1, 2019 is fixed at 5.05%. Any loan with a first disbursement date on or after Oct. 1, 2018 and before Oct. 1, 2019 has a loan fee of 1.062%.
Each of these loan programs have a six-month grace period if a student drops below six credits (half-time) -- an important consideration when withdrawing from courses. If you withdraw and are enrolled in less than six credits, your grace period will begin.
- Circumstances that may change your grace period include the following:
Active duty military—If you are called to active military duty for more than 30 days before the end of your grace period, you will receive the full six-month grace period when you return from active duty.
- Returning to school before the end of your loan’s grace period—If you reenroll in school at least half-time before the end of your grace period, you will receive the full six-month grace period when you stop attending school or drop below half-time enrollment (other conditions apply).
- Loan consolidation—If you consolidate your loans during your grace period, you will give up the remainder of your grace period and begin repayment after your Direct Consolidation Loan is disbursed (paid out). Your first bill will be due approximately two months after the Direct Consolidation Loan is disbursed.