Direct Subsidized Loans are federal student loans available to eligible undergraduate students who demonstrate financial need. The U.S. Department of Education pays the interest on these loans while the student is in school at least half-time, during the grace period, and during deferment periods. These loans help reduce the overall cost of borrowing for students, making higher education more accessible. Borrowers are responsible for repaying the principal amount plus any interest that accrues after they leave school or drop below half-time enrollment.