Federal Direct loans to students are either subsidized or unsubsidized. Direct Subsidized Loans are awarded to students with financial need. The U.S. Department of Education pays the interest on a Direct Subsidized Loan:

• while you are in school at least half-time,
• for the first six months after you leave school (referred to as a grace period*), and
• during a period of deferment (a postponement of loan payments).

*If you receive a Direct Subsidized Loan that is first disbursed between July 1, 2012 and July 1, 2014, you will be responsible for paying the interest that accrues during your grace period. The interest will be added to your principal balance, if you choose not to pay the accrued interest during your grace period.

An unsubsidized loan is not awarded on the basis of need. The borrower is responsible for paying the interest on a Direct Unsubsidized Loan during all periods. If the borrower chooses not to pay the interest while in school, during grace periods, deferment or forbearance periods, the interest will accrue (accumulate) and be capitalized (added to the principal amount of the loan). The borrower can receive a subsidized loan and an unsubsidized loan for the same enrollment period. A student must be enrolled at least half-time (six credit hours) to be eligible for a Federal Direct Loan, subsidized or unsubsidized.

Additional information regarding the William D. Ford Federal Direct Loan Program can be found at the Federal Student Aid Web site, http://www.studentaid.ed.gov. You may also visit the Financial Aid Web pages for more detailed information about applying for a student loan.