for most students loans are just a part of life without student loans most of us couldn't go to school complete a degree and find a good job in fact more than two-thirds of students attending college today will need to borrow student loans luckily many student loans offer relatively low interest rates and borrower friendly repayment options but loan limits do apply as there are limits to the amount you can borrow by loan type and only up to the cost of Education make sure you don't borrow more than your total education cost as it could prevent you from receiving some of the gift aid you're eligible for federal loans provided through the government are usually the first choice for student borrowers to cover college costs after exhausting federal loan funding institutional loans which are offered through your school and private loans offered by private loan lenders are available a direct loan is a common federal loan the interest rate on a direct loan is set by the federal government and has the same terms and conditions which are also set by the government while the rate may change from one year to the next the interest rate you're given is fixed for the life of your loan Direct Loans come in two different types subsidized and unsubsidized subsidized means that no interest is accruing while you're in school in a grace period or when you have an authorized deferment the government is actually paying the interest on these loans during that time for you however there are a few exceptions to when the government pays the interest on your subsidized loans be sure to check with your loan servicer if you're not sure whether your loans interest will be subsidized on the other hand if you have an unsubsidized Direct Loan you are responsible for all of the interest that accrues on these loans and that interest starts accruing as soon as the funds are dispersed the basic life cycle of a federal direct loan starts when you're in school of course but in school status means different things to different schools so just make sure you maintain your school's interpretation of at least halftime status the definition of halftime is determined by your school if you are unsure if you qualify as at least halftime please confirm with your school administrators during the in-school period no payments are required and interest will accrue only on unsubsidized loans once you're done with school or drop below halftime status your Direct Loans go into their six month grace period your grace period is an automat timeframe in which no payments are required following the six-month grace period after you're done with school or drop below halftime status the loan goes into repayment at this point payments will be required both on interest that has accrued on the loan as well as on the principal balance we'll talk more about this last phase of the loan cycle in lesson three of this tutorial but next we'll cover your rights and responsibilities as a direct loan borrower