Federal Direct Loan Overview

A Federal Direct Loan is a low-interest, fixed rate loan made to students. Generally, every student who files a FAFSA is eligible to borrow a Federal Direct Loan. Students may qualify to have a portion of their federal loan eligibility subsidized based on their financial need as determined by the FAFSA results. A student must be enrolled at least half-time to be eligible to receive a Federal Direct Loan.

Helpful information regarding Federal Student Aid is available online at www.studentaid.ed.gov.

Federal Direct Loan Interest Rates

  Federal Direct Subsidized Loan

Federal Direct Unsubsidized Loan

Interest Rate *2.75% (fixed) *2.75% (fixed)
Is interest charged when the students is enrolled in school? No - interest does not accrue when the student is enrolled in school.     Yes - interest accrues when the student is enrolled in school.          
Is interest charged during Deferment? No.


Is interest charged during the Grace Period? Yes. Yes.
Is interest charged during Repayment? Yes. Yes.

*2020-2021 Federal Direct Loans disbursed between July 1, 2020 and June 30, 2021. Click here for prior year interest rates.  

  • Loan Origination Fee: 1.059%
    • The origination fee is deducted from each disbursement 

Subsidized & Unsubsidized: What's the Difference?

Interest is not charged on a Subsidized Direct Loan while you're enrolled at least half-time at Lawrence (9 or more units), during grace periods, and during deferment periods. Subsidized Direct Loans are for students with "financial need" as determined by their Expected Family Contribution (EFC).

You are not required to demonstrate "financial need" to receive a Unsubsidized Direct Loan. Interest is charged and accumulates on an Unsubsidized Direct Loan from the time it’s first disbursed (credited to your student account). You can elect to pay the interest (although you're not required to) while you're in school, during grace periods, deferment or forbearance periods, or you can allow it to accrue and be capitalized (that is, added to the principal amount of your loan). If you choose not to pay the interest as it accrues, this will increase the total amount you have to repay because you will be charged interest on a higher principal amount.

Federal Direct Subsidized Loan

The Federal Direct Subsidized Loan is awarded to students who demonstrate financial need as determined by the FAFSA. Interest on a Direct Subsidized Loan is paid by the federal government while the student is enrolled at least half-time, during deferment periods and, for loans disbursed before July 1, 2012, during the 6-month grace period. Repayment begins 6 months after a student graduates or is no longer enrolled at least half-time (9 units).

Federal Direct Unsubsidized Loan

Federal Direct Unsubsidized Loans are non-need-based loans. Interest begins accruing on the loan at the time of disbursement. The student has the option to make interest payments during the in-school period, or to allow the accrued interest to be capitalized (added on) to the principal balance. Repayment begins 6 months after a student graduates or is no longer enrolled at least half-time.