which loan type provides interest subsidy meaning department of education

The loan type that provides an interest subsidy, meaning the U.S. Department of Education pays the interest, is the Direct Subsidized Loan. This loan is available to undergraduate students who demonstrate financial need. The Department of Education pays the interest on this loan while the student is in school at least half-time, during the grace period, and during deferment periods. The student is responsible for repaying the principal amount but not the interest during these periods.