On July 6, 2012, President Obama signed Public Law 112-141 that included a one-year extension of the 3.4 percent interest rate that has applied to Direct Subsidized Loans made to undergraduate students since July 1, 2011. With this action, the interest rate on any Direct Subsidized Loan first disbursed on or after July 1, 2012 and before July 1, 2013 will be 3.4 percent.

The 3.4 percent interest rate applies only to Direct Subsidized Loans made to undergraduate students. The interest rate on Direct Unsubsidized Loans made to both undergraduate and to graduate or professional students remains at 6.8 percent.  Graduate and professional students are not eligible for Direct Subsidized Loans for loan periods beginning on or after July 1, 2012.