Federal Subsidized and Unsubsidized Direct Student Loans Review

Federal direct student loans don’t require credit or income to apply. They are the most widely used college lending option.
Anna HelhoskiJul 9, 2021

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Our Take


NerdWallet rating 

The bottom line: Federal direct subsidized and unsubsidized student loans are offered by the federal government. They are the best first option for borrowing money for college.

Federal Subsidized/Unsubsidized Loan

Federal Subsidized/Unsubsidized Loan

Fixed APR

3.73 - 5.28%

Min. Credit Score


Pros & Cons


  • More flexible repayment options for struggling borrowers than other lenders.
  • Subsidized loans do not collect interest while in school or during deferment.
  • Lower interest rates compared with private lenders.


  • You pay an origination fee.

Compare to Other Lenders

Discover Private Student Loan
Sallie Mae Private Student Loan
NerdWallet rating 
NerdWallet rating 
Check RateCheck Rate
Fixed APR

3.49 - 12.59%

Fixed APR

3.50 - 12.60%

Variable APR

1.12 - 11.87%

Variable APR

1.13 - 11.23%

Min. Credit Score

Does not disclose

Min. Credit Score


Full Review

Federal direct student loans are the best option for students who need to borrow money to pay for college.

Unlike private student loans, federal direct student loans don’t require credit history or a co-signer. They also offer borrowers more repayment options and protections to prevent default. And federal loans are the only way to get Public Service Loan Forgiveness.

Use before you consider taking out private student loans.

Federal student loans are the best option for students, but they're not perfect. They could improve by:

If you’re ready to borrow a federal student loan, you can apply by submitting a FAFSA. The form is available to complete , with your Federal Student Aid ID. You can also submit a paper FAFSA by mail.


To apply, you’ll need all documents included on the , according to your dependency status.

After you submit the FAFSA, you’ll receive a Student Aid Report, which summarizes the information you included in the FAFSA as well as your expected family contribution. That’s the amount the government says your family can afford to pay out of pocket for college.

When you receive your college acceptance letters, you’ll also receive a that details all free money you may be eligible for (grants, scholarships and work-study) as well as the federal direct loans you can borrow.

Accept all free aid first before taking out federal loans. Also, you may not need all of the loans offered. Your school will tell you how to turn down a loan or request a lower loan amount.

If you have a payment gap to fill after you maximized all grants, scholarships, work-study and federal loans, you may consider borrowing a private loan.

to make sure you’re getting the best rate you qualify for. In addition to interest rates, look at lenders’ repayment alternatives and the flexibility they offer to borrowers who struggle to make payments.

NerdWallet believes the best student loan is one you can repay at the lowest interest rate you can get. That’s why NerdWallet’s student loan ratings reward lenders that offer a variety of loan terms, limit their fees and penalties, and extend borrowers multiple options to avoid default. Points are also awarded for soft credit checks, underwriting transparency and other consumer-friendly features. Use these ratings as a guide, but we encourage you to shop around for the lowest interest rate you can qualify for. NerdWallet does not receive compensation for its reviews. Read our .