Subsidized, unsubsidized and PLUS loans

Direct Subsidized Loans

Subsidized loans are for undergraduates who show financial need, as your school works it out from your FAFSA and your cost of attendance. The government pays the interest while you are enrolled at least half-time, during the six-month grace period after you leave and during approved deferment.

Because no interest builds during those times, a subsidized loan costs less than an unsubsidized loan of the same size. The amount you can take is capped each year by law, and there is also a lifetime cap on how much you can borrow of this type.

Direct Unsubsidized Loans

Unsubsidized loans are open to undergraduates and graduate students, and they do not depend on financial need. Interest starts on the day the money is paid out and continues until the loan is repaid, including while you are in school. You can pay that interest as you go or let it build.

Undergraduate limits depend on your year in school and on your dependency status. Students the FAFSA treats as independent can usually borrow a larger unsubsidized amount, and so can some dependent students whose parents are turned down for a PLUS loan.

Direct PLUS Loans

Parent PLUS loans let the parent of a dependent undergraduate borrow toward that student's costs. The parent is the borrower and is legally responsible for repaying the loan, even though the money pays the student's bills. A PLUS loan involves a credit check for adverse credit history, and the amount a parent can borrow is capped under limits set by law.

Graduate and professional students could also borrow PLUS loans in past years, but Congress ended that option for new graduate borrowers starting in mid-2026. Transition rules may cover students who were already borrowing for their program, so ask the graduate aid office what applies to you.

Where the limits are published

Loan limits for all three types are set by law and posted on studentaid.gov, along with that year's interest rates and fees. Your aid offer shows how much of each type your school has offered for the year. That amount can sit below the legal limit when your other aid already covers most of your costs.

If a type you expected is missing from your offer, ask the aid office why. The answer often comes down to financial need, your enrollment level or a FAFSA detail that can be corrected.