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You are here: Home / Types of Aid / Loans / Federal Direct Subsidized and Unsubsidized Loans / Subsidized vs. Unsubsidized Loans

Subsidized vs. Unsubsidized Loans

The differences between Direct Subsidized and Unsubsidized Loans

Direct Subsidized Loan

Direct Unsubsidized Loan

Based on financial need Not based on financial need
The federal government pays the interest on the loan while you are enrolled in school at least half-time. Interest begins accumulating as soon as funds are disbursed until the loan is paid in full. Accrued interest will be added to the balance of the loan. (You are not required to pay the interest while you are in school, but we recommend that you do.)
Undergraduate student fixed interest rates:
  • 3.76 percent for loans disbursed on/after July 1, 2016
Undergraduate student fixed interest rates:
  • 3.76 percent for loans disbursed on/after July 1, 2016
*Graduate students are not eligible to receive Direct Subsidized Loans. Graduate student fixed interest rates:
  • 5.31 percent for loans disbursed on/after July 1, 2016

Origination fees:

  • 1.068 percent for loans first disbursed on/after Oct 1, 2015

Origination fees:

  • 1.068 percent for loans first disbursed on/after Oct. 1, 2015


Penn State Federal School Code

003329

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