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About Federal Direct Loans



What are Federal Direct Loans?

Federal Direct Loans are education loans from the U.S. government. They are either subsidized or unsubsidized.

A subsidized loan is awarded on the basis of financial need. You won’t be charged any interest before you begin repayment or during authorized periods of deferment because the federal government “subsidizes” the interest during these periods.

Unlike a subsidized loan, an unsubsidized loan is not based on financial need. You’ll be charged interest from the time the loan is disbursed until it is paid in full. If you allow the interest to accumulate while you are in school or during other periods of nonpayment, it will be capitalized – that is, the interest will be added to the principal amount of your loan, and then additional interest will be based on that higher principal amount.

You can receive a subsidized loan and an unsubsidized loan for the same enrollment period.

Who can get a Federal Direct Loan?

If you’re a student enrolled in an eligible program at least half time, you may receive a Federal Direct Loan. You must meet other general eligibility requirements as well.

How do I get this loan?

You apply using the FAFSA or Renewal FAFSA, just the way you would for other federal student aid. Then you complete a promissory note provided by the school or the U.S. Department of Education. The promissory note is a binding legal document; when you sign it you’re agreeing to repay the loan under certain terms. Read the note carefully and save it.

How much can I borrow?

The maximum amount you can borrow each year in Federal Direct Loans depends on your year in school and on whether you are a dependent student or an independent student. Click here for a complete listing of the amount you may borrow under the Federal Direct Loan program.

What is the interest rate on these loans?


For both Undergraduate Direct Subsidized and Unsubsidized Loans:
The interest rates on undergraduate Direct Subsidized Loans with an earlier first disbursement date varies:
The interest rate for graduate Direct Unsubsidized Loans:
The interest rate for PLUS Direct Unsubsidized Loans:

When do I pay back these loans?

After you graduate, leave school, or drop below half-time enrollment, you have a six-month grace period before you must begin repayment.

During the grace period on a subsidized loan, you don’t have to pay any principal and you won’t be charged interest. In contrast, during the grace period on an unsubsidized loan you don’t have to pay any principal but you will be charged interest. You can either pay the interest or it will be capitalized.

After you graduate, leave school, or drop below half-time enrollment, your lender will send you information about repayment and notification of the date it will begin. However, you’re responsible for beginning repayment on time even if you don’t receive this information. Failing to make payments on your loan is likely to have a negative effect on your credit rating.


Sample Repayment Schedule - 3.86%
Loan Amount# of Monthly PaymentsMonthly PaymentTotal Paid
$5,000120$50.29$6,034.87
$7,500120$75.44$9,052.30
$10,000120$110.58$12,069.73
$15,000120$150.87$18,104.60
$20,000120$201.16$24,139.47

Sample Repayment Schedule - 5.41%
Loan Amount# of Monthly PaymentsMonthly PaymentTotal Paid
$5,000120$54.04$6,484.85
$7,500120$81.06$9,727.28
$10,000120$108.08$12,969.70
$15,000120$162.12$19,454.56
$20,000120$216.16$25,939.41


How do I get more information about Federal Direct Loans

Get more information on Federal Direct Loans by visiting the U.S. Department of Education's Direct Loan site.