Direct Subsidized/Unsubsidized Loan Repayment

Grace Period

After you graduate, leave school, or drop below half-time enrollment, you will begin a one-time six month grace period before repayment begins. Interest does not accrue on Direct Subsidized Loans disbursed after July 1, 2014 during the grace period. Your federal loan servicer will notify you of the date your loan repayment begins and will provide further details about making payments.

Repayment Comparison Table

If you have a Direct Unsubsidized Loan, you have the option to pay interest while you are in school, or you can wait until you are no longer enrolled. Our office recommends that you pay the interest to minimize your loan debt. If you do not pay the interest, it will capitalize and be added to your total repayment amount. The example below illustrates the benefits of paying the interest while you are in school.


With Interest Capitalization

Without Interest Capitalization

  (interest not paid while in school) (interest paid while in school)

Original Loan Balance



Capitalized Interest


$0.00 *

Current Loan Balance



Interest Rate

6.8 percent

6.8 percent

Maximum Term

120 months

120 months

Fixed Repayment Amount for 119 months



Fixed Repayment Amount for 1 month



Total Repayment Interest



Total Repayment Amount



* Making loan interest payments benefits borrowers in the long run. For example, in this comparison, the monthly installment is $55.24 less and the total repayment at the end of the life of the loan is a savings of $1,828.41 in interest.

National Student Loan Database System (NSLDS)

Review your NSLDS record by logging into You can review information about:

  • Loan servicer assignment and contact information
  • Repayment begin dates
  • Total federal loan debt

Exit Counseling

When you have submitted your graduation date in LionPATH, or cease to be enrolled at Penn State, you will be selected for Federal Loan Exit Counseling. No holds will appear on your record, but you will be sent a series of three email reminders to complete the counseling at

Exit Counseling provides important information to prepare you to repay your federal student loan(s).

If you have received a Direct Subsidized, Unsubsidized or PLUS loan under the Direct Loan Program or the FFEL Program, you must complete exit counseling each time you:

  • Drop below half-time enrollment
  • Graduate
  • Leave school

Repayment Plans

You will be able to choose a repayment plan that meets your needs. The amount you pay and the length of time to repay your loans will vary depending on the repayment plan you choose. Typical loan repayment terms are 10 to 25 years.

Review the Student Loan Repayment on the Federal Student Aid site.

The Student Loans online repay tool will guide you to your best repayment option.