student loan interest rates for May 2020

What is a Subsidized Student Loan?

Summary: Direct Subsidized Loans (typically referred to as Subsidized Stafford Loans) are federal student loans borrowed via the Direct Loans program that supply undergraduate students a low, fastened rate of interest and versatile compensation phrases. Demonstrated monetary want is required to qualify, and the federal authorities pays the curiosity when you’re at school no less than half-time, throughout the grace interval, and in periods of licensed deferment.

Direct Subsidized Loans (typically referred to as Subsidized Stafford Loans) are low-cost, fixed-rate federal student loans accessible to undergraduate students with demonstrated monetary want.

Since the federal authorities pays the curiosity if you are at school no less than half-time, throughout the grace interval, and in periods of licensed deferment, Direct Subsidized Loans are the least costly federal student loans accessible.

Key advantages:

  • Fixed rate of interest of three.73% for the 2021-2022 tutorial yr
  • Eligibility relies on demonstrated monetary want, as decided by the FAFSA
  • The federal authorities pays the curiosity when you’re at school no less than half-time, throughout the grace interval, and in periods of licensed deferment.
  • No funds if you are enrolled at school no less than half time
  • Multiple compensation plans (together with income-based) accessible

How to Apply for a Direct Subsidized Loan (aka Subsidized Stafford Loan)

You must file the Free Application for Federal Student Aid (FAFSA®) earlier than you possibly can take out federal student loans from the Direct Loans program.

  1. Complete the FAFSA or Renewal FAFSA (for returning students) at StudentAid.gov.
  2. Receive a monetary assist award letter by mail or e-mail out of your college’s monetary assist workplace. This letter will summarize your accessible monetary assist, together with Direct Subsidized Loans (if eligible).
  3. Contact your college’s monetary assist workplace to simply accept the monetary assist and together with student loans.
  4. Sign any related paperwork such because the Master Promissory Note (MPN).
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Direct Subsidized Loan Eligibility

Only undergraduate students with demonstrated monetary want are eligible to take out Direct Subsidized Loans. Graduate {and professional} college students are at the moment ineligible for Direct Subsidized Loans. (Prior to July 1, 2012, graduate-level students have been eligible for as much as $8,500 a yr in Direct Subsidized Loans.)

Required:

  • Undergraduate student
  • Have demonstrated monetary want as decided by the FAFSA
  • U.S. citizen, nationwide, or eligible non-citizen
  • Have acquired a highschool diploma or the equal (e.g., GED)
  • Enrolled no less than half time in an eligible diploma or certificates program
  • Not in default on any current federal student loans
  • Meet basic eligibility necessities for federal student assist

Not Required:

  • Credit test
  • Cosigner
  • Separate loan software

student loan interest rates for May 2020 

Interest Rates and Fees for Direct Subsidized Loans

The rates of interest on Direct Subsidized Loans are fastened and don’t change over the lifetime of the loan.

The present payment on Direct Subsidized Loans is 1.057% for loans borrowed via Sept. 30, 2022. Fees are deducted from every loan disbursement. You can ask the faculty monetary assist workplace to extend the loan quantity to cowl the charges, as much as the annual loan restrict.

Sallie Mae student loans provide aggressive fastened and variable charges for undergraduates, graduate students and fogeys. Learn More About Sallie Mae

When Does the Federal Government Pay the Interest On Direct Subsidized Loans?

  • While you’re enrolled at school no less than half-time
  • During the 6-month grace interval after you allow college
  • During durations of licensed deferment

The federal authorities doesn’t pay the curiosity in periods of forbearance.

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Loan Limits: How Much You Can Borrow

Annual and combination (cumulative) loan limits on the Direct Subsidized Loan are the identical for dependent and unbiased students.

Borrowing Limits — Direct Subsidized Loans

Direct Stafford Loan Limits Dependent Student Annual Loan Limits

Direct Stafford Loan Limits Independent Student Annual Loan Limits

Can I get extra Direct Subsidized Loan funds?

Direct Subsidized Loans have annual and combination limits that can’t be elevated. However, when you acquired much less than the utmost Subsidized Loan award to your tutorial degree and your monetary state of affairs has modified considerably because you filed your FAFSA, you need to discuss to the monetary assist administrator at your college to search out out if the backed loan award might be elevated.

How Direct Subsidized Loan Funds are Distributed

If you’re a first-time Direct Loans borrower, you can be required to attend entrance counseling earlier than your loan funds are despatched (disbursed) to your college. Some faculties require in-person counseling, however many provide on-line counseling. You will study concerning the loan phrases, situations, and necessities throughout the counseling session.

You may even be required to signal a Master Promissory Note (MPN) earlier than the loans might be disbursed.

The Direct Loan program sends the funds to your college to be credited to your student account. In most circumstances, the loan can be despatched (disbursed) in no less than two installments.

Special reminder: There is usually a 30-day delay in disbursing student loans to first-time, first-year debtors.

Loan funds are credited to your account on this order:

  1. Tuition and costs
  2. Room and board (in case you are dwelling in college-owned student housing)
  3. Other college prices (together with your permission)
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If any loan funds stay in your account, the credit steadiness can be refunded to you by test, money, debit card, or digital funds switch (EFT) to your bank account. Remember, the refund have to be used to pay to your direct and oblique schooling bills, reminiscent of textbooks, provides, and tools.

In-School Deferment and Grace Period

While you’re enrolled at school no less than half-time, your Direct Subsidized Loans can be positioned into deferment, which implies you don’t need to make any funds. In addition, you don’t need to make funds throughout the 6-month grace interval after you graduate or drop under half-time enrollment standing.

The federal authorities pays the curiosity in your loans throughout these durations of licensed deferment.

Direct Loan Repayment

The customary compensation time period on Direct Loans is 10 years. However, you possibly can qualify for an extended compensation time period when you consolidate the loans or have greater than $30,000 in federal student loans.

Direct Subsidized Loans are eligible for the entire completely different compensation plans supplied by the U.S. Department of Education.

Eligible compensation plans:

Recommendations

  1. File the FAFSA yearly to take care of eligibility for student assist.
  2. Apply for grants and scholarships.
  3. Borrow Direct Subsidized Loans (if eligible) first. Then, take out Direct Unsubsidized Loans. If you might have borrowed the utmost in Direct Loans and nonetheless can’t pay your whole prices, contemplate different funding choices like non-public student loans.

Learn More About Federal Student Loans

Unsubsidized Student Loans

Undergraduate Student Loans

Interest Rates

Loan Limits

Filing the FAFSA

FAFSA Deadlines

Financial Aid for Graduate School

Health Professions Student Loans