Who pays the interest on a subsidized federal student loan?

For subsidized federal student loans, the U.S. Department of Education pays the interest while the borrower is in school at least half-time, during the grace period, and during deferment periods. This benefit helps reduce the overall cost of borrowing for students, as they are not responsible for accruing interest during these times. Once the borrower enters repayment, they will be responsible for paying the interest.