Direct Subsidized Loans are available to undergraduate students who demonstrate financial need as determined by their completed Free Application for Federal Student Aid (FAFSA). The U.S. Department of Education pays the interest while you attend school at least half time, as long as you complete your program on time.
As of July 1, 2013, first-time borrowers are only eligible to borrow Direct Subsidized Loans for up to 150 percent of the published length of the program in which they’re enrolled.
Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need. With an unsubsidized loan, you are responsible for paying the interest during all grace, deferment or forbearance periods. If you do not pay the interest during these periods, the interest will be added to the principal balance.
For more information, please see Federal Student Aid.