A glance @ FDS

A federal direct subsidized loan is:

  • federally funded
  • subsidized (interest is not added until enrollment falls below half-time)
  • based on need
  • repaid once you are no longer enrolled at least half-time

Federal Direct subsidized loan

This is a federally financed and subsidized student loan made based on your financial need and other specific eligibility requirements. Undergraduate students may borrow up to the cost of attendance minus the expected family contribution and any other aid received. You may not borrow more than the maximum annual or aggregate amount. The federal government does not charge interest on these loans while you are enrolled at least half-time.

Changes in federal law have eliminated graduate student eligibility for subsidized loans. Graduate students may still be eligible for unsubsidized loans or a Grad PLUS. Loan limits remain the same, but interest begins accruing immediately on unsubsidized loans.

There is a time limit for Federal Subsidized Loans. Subsidy is limited to 150 percent of the length of the educational program for subsidized loans that were disbursed on or after July 1, 2013, for students who have no outstanding balance of principle or interest (Direct Loan or FFELP) at the time of their disbursement. For example, if a student is enrolled in a four-year educational program, their eligibility limit for subsidized loans is six years.


  • Federally funded
  • Need-based -- File a FAFSA fafsa link annually

  • The fixed interest rate for loans in the deferment or six-month grace period is as follows:
    • 4.29 percent for undergraduate loans disbursed July 1, 2015 to June 30, 2016.
    • 4.66 percent for undergraduate loans disbursed July 1, 2014 to June 30, 2015.
    • 3.86 percent for undergraduate loans disbursed July 1, 2013 to June 30, 2014.
      • Effective July 1, 2013 - Interest rates are adjusted yearly based on the 10-year U.S. Treasury note index rate. The interest rate cap for undergraduate subsidized and unsubsidized loans is 8.25 percent.
    • 3.4 percent for loans disbursed July 1, 2012 to June 30, 2013.
      • Graduate students are not eligible for subsidized loans beginning July 1, 2012.
      • The government does NOT pay your interest during the six-month grace period on new loans beginning July 1, 2012.
    • 6.8 percent for graduate loans disbursed July 1, 2006 to June 30, 2012.
      • Graduate students are not eligible for subsidized loans beginning July 1, 2012.
  • 1.073 percent origination fee; no interest rate rebate.
  • Subject to annual and aggregate loan limits.
  • This is a loan you must repay to the U.S. Department of Education.
  • Complete the student financial aid adjustment form if you wish to cancel or reduce a loan that has not been disbursed to your WMU account. If the loan has already disbursed, you must complete the student financial aid adjustment form within 30 days of the date of disbursement. Please note: canceling or reducing a disbursed loan may result in a balance due on your WMU account.
  • After you have accepted your subsidized loan, you will receive a "Federal Direct Loan Disclosure Statement" from the Direct Loan Servicing Center or WMU. The disclosure statement identifies anticipated disbursement dates, gross and net disbursement amounts and loan fee amounts for all your federal direct loans for the academic year.


  • Completed federal master promissory note (MPN) link off site required for first-time borrowers
  • Federal loan entrance counseling link off site required for first-time borrowers at WMU
  • Award eligibility based upon EFC, cost of attendance, enrollment and other resources
  • Award will be canceled if enrolled less than half-time
  • Award may be adjusted or canceled if there is a change to EFC, cost of attendance, enrollment, graduating in August or December or if you receive additional resources
  • Undergraduate, or teacher certification
  • Must be enrolled at least half-time
  • Must be making SAP
  • Need-based
  • US Citizen or eligible non-citizen
  • Not in default on prior educational loans


  • Repayment deferred while enrolled at least half-time
  • You will begin to repay your loan six months after you cease to be enrolled at least half-time. During this six-month "grace period", interest will not accrue on your loan if it is first disbursed after July 1, 2014. For sample repayment amounts, see the federal loan repayment fact sheet.
  • Complete an exit counseling session so you are aware of all the information you will need to know about repaying your loan.
  • If you drop to less than half-time, withdraw, drop out, graduate or simply do not return to school, this information will be reported to the loan servicer and they will begin to count your grace period. You are responsible for notifying WMU immediately if your enrollment changes as described above.
  • Payments will be made to the U.S. Department of Education (holder of the loan)
  • For detailed information about repayment, deferments, forbearance, forgiveness programs and other frequently asked questions, go to link off site
  • To obtain information about consolidating your federal loans, visit link off site. The interest rate for a direct consolidation loan is the weighted average of the interest rates on the loans being consolidated and is fixed for the life of the loan.
  • It is important that you maintain a "very important papers file" and keep copies of your award notices, MPN, borrower's rights and responsibilities and the direct loan disclosure statement in one place as they provide the details of your loans and your rights and responsibilities as a student loan recipient.

Contact information

Updated: 05/20/2015 10:16 AM

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Student Financial Aid
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