Difference Between a Direct Federal Subsidized Loan and Direct Federal Unsubsidized Loan

Subsidized Loans
  1. Available to students who demonstrate financial need.
  2. The U.S. Department of Education pays the interest:
    • While enrolled in school for at least half-time (six hours).
    • During a period of deferment (a postponement of loan payments).
  3. The amount of the subsidized loan cannot exceed your financial need.

Unsubsidized Loans

  1. Does not require students to demonstrate financial need.
  2. The U.S. Department of Education does not pay interest on unsubsidized loans.
  3. You are responsible for paying the interest that accrues on the loan from the time the loan is disbursed until it is paid in full.
  4. You can pay the interest while you are in school or during a period of deferment or forbearance.
  5. You may allow the interest to accrue and have the interest added to the principle amount of your loan which is known as capitalization.

Depending on your financial need, you may receive both subsidized and unsubsidized loans for the same enrollment period, but the total amount of these loans may not exceed the annual loan limit (see chart below).

Maximum Annual Loan Limits - Subsidized and Unsubsidized
Year in College Dependent
Undergraduate Student
Undergraduate Student
Graduate and Professional
Degree Student
0-29 hours completed
$3,500 Subsidized
$2,000 Unsubsidized
$3,500 Subsidized
$6,000 Unsubsidized
Unsubsidized Loans
30-59 hours completed
$4,500 Subsidized
$2,000 Unsubsidized
$4,500 Subsidized
$6,000 Unsubsidized
Junior - Senior
60+ hours completed
$5,500 Subsidized
$2,000 Unsubsidized
$5,500 Subsidized
$7,000 Unsubsidized
Maximum Total Debt
allowed in a lifetime
$31,000¹ $57,500¹ $138,500²

¹ Only $23,000 of this amount may be in subsidized loans
²The graduate debt limit includes loans received during undergraduate study

NOTE: The amounts shown in the chart above are the maximum amounts that you may borrow for an academic year. An academic year for financial aid awarding purposes consists of the fall, spring and consecutive summer terms; for example: Fall 2016, Spring 2017 and Summer 2017 (SSI, SSII and SSIII combined). You might receive less than the maximum if you receive other types of financial aid that is used to cover a portion of your cost of attendance. You will also be limited on the amount you can borrow if you are borrowing for a term less than an academic year, such as a Spring only loan. The amount of the loan can not exceed the student's cost of attendance.

Additional Information:

Are you considered a Graduate Student?

Required Entrance/Exit Counseling Sessions Dates?

What are the Interest Rates and Fees?

What is the Direct Subsidized Loan Maximum Eligibility Period?

When is the disbursement of Loan Funds?

Texas A&M International University
Zaffirini Student Success Center Suite 214
5201 University Blvd.
Laredo, TX 78041

Phone 956.326.2225
Fax 956.326.2224