Federal Direct Subsidized & Unsubsidized Loans

Federal Direct Student Loans are long-term, low interest loans from the U.S. Department of Education. They are the largest federal aid program and the programs you are most likely to find in your aid offer. There are two types of Federal Direct Student Loans: Subsidized and Unsubsidized.  The primary differences are their financial need requirements and the point at which interest begins to accrue, and graduate students are not eligible to borrow Subsidized Loans.

  • Subsidized Loans require Financial Need and undergraduate status.  No interest will accrue on a subsidized loan and no principal will be due until the end of your 6-month grace period, which will begin when you graduate, leave the university, or drop below half-time enrollment.
  • Unsubsidized Loans do not require Financial Need. Interest on an Unsubsidized Loan begins on the day that the loan is disbursed and continues until the day that you repay the loan in full. You can pay the accumulating interest while you are in school, during the grace period, or during deferment; or you have the option of capitalizing the interest (adding unpaid, accumulated interest to the total Unsubsidized amount borrowed when you begin repayment). This may give you a way to postpone making interest payments, but it also increases the total cost of your loan.

Your aid offers may include a combination of Subsidized and Unsubsidized loans.  For example, a freshman with a Subsidized loan of $500 may also receive an offer of an Unsubsidized loan for $5,000 to meet the annual combined Subsidized and Unsubsidized freshman limit.

Eligibility Requirements

Application Process

To apply for these loans, you must repeat all of these steps every academic year.

  1. Complete a Free Application for Federal Student Aid (FAFSA).
  2. In March and April of each year, we start sending Financial Aid Notifications to FAFSA applicants.
  3. Next, follow the instructions for Accepting Aid offers.

Loan Limits

The maximum amount you can borrow per year depend on your FAFSA Dependency Status, and your grade level as determined by your earned course units.

Subsidized loans require financial need. Students without sufficient financial need can still borrow the same “Maximum Total Direct Loans,” but more or all of their loans will be Unsubsidized. Graduate students are only eligible for Unsubsidized Direct Loans.

Annual limits — Dependent Students

Grade Level-Units earned Maximum Subsidized Portion Additional Unsubsidized Portion maximum total Direct Loans
Freshman, 0-29 $3,500 $2,000 $5,500
Sophomore, 30-59 $4,500 $2,000 $6,500

Junior/Senior, 60+

$5,500 $2,000 $7,500

Annual Limits — Independent Students

Grade Level-Units earned Maximum Subsidized Portion Additional Unsubsidized Portion Total Direct Loans
Freshman, 0-29 $3,500 $6,000 $9,500
Sophomore, 30-59 $4,500 $6,000 $10,500
Junior/Senior, 60+ $5,500 $7,000 $12,500
Graduate N/A $20,500 $20,500

Aggregate (Lifetime) Limits

Students Maximum Subsidized Portion Additional Unsubsidized Portion Total Direct Loans
Dependent Undergraduates $23,000 $8,000 $31,000
Independent Undergraduates $23,000 $34,500 $57,500
Graduate Students N/A $138,500 $138,500*

*The aggregate graduate limit includes all undergraduate and graduate loans.

Interest Rates and Disbursement Fees

Loan financing costs include the interest that accrues during the life of the loan and a Loan Disbursement Fee that is deducted from each loan disbursement before it is credited to your university account.

Interest Rates

These interest rates apply to academic year loans first disbursed from 7/1/23 to 6/30/24

Direct Subsidized Loans 5.5% N/A
Direct Unsubsidized Loans 5.5% 7.05%
PLUS Loans 8.05% 8.05%

The interest rates for loans first disbursed after 6/30/2024 will be available here in mid-May 2024. For loans first disbursed from 7/1/22 to 6/30/23, the interest rates were 4.99% for undergraduate subsidized and unsubsidized loans, 6.4% for graduate unsubsidized loans and 7.4% for all PLUS Loans.

Loan Disbursement Fees

The following disbursement fees will be deducted from your semester loan disbursements based on the date of the first disbursement of each loan.

LOAN TYPE First Disbursed 10/1/20 to 9/30/24
Direct Subsidized & Unsubsidized Loans 1.057%
PLUS Loans 4.228%

Loan Repayment Information

You must begin to repay your loan at the end of a 6-month grace period that begins when you graduate, leave school, or drop below half-time enrollment.

For additional information, visit these U.S. Department of Education web pages:

  • Use the Loan Simulator to estimate your monthly payments.
  • Compare the 8 Repayment Plan options. The Standard Repayment Plan offers the lowest total borrowing costs because it pays off your loan the fastest, but the other plans can be helpful if the monthly payments from the standard plan are too high. If you want to pay off your loan faster, you can prepay all or a portion of your loan at any time without penalty.
  • If you have repayment problems or questions, contact your federal loan servicer.  To find your servicer, login to studentaid.gov. They can help you to avoid the consequences of delinquent payments and default. Many options are available including different repayment plans, Deferments, and Forbearance.
  • Learn about your Loan Deferment and Forbearance options.
  • During qualified enrollment deferment periods, you may defer making payments on your loans.  For Subsidized Loans, interest will not accrue during these deferment periods.  For Unsubsidized Loans, interest will continue to accrue during all deferment periods.
  • If you don't qualify for a deferment, but are having trouble making your payments, you can request a "Forbearance." If your request is approved, you can temporarily postpone your loan payments, but interest will continue to accrue.
  • You could also consider switching to a different Repayment Plan.
  • Direct Loans are also eligible for several Loan Forgiveness, Cancellation, and Discharge options including but not limited to Total and Permanent Disability Discharge, Teacher Loan Forgiveness, and Public Services Loan Forgiveness.
  • If you have borrowed from several different federal loan programs, you may want to use a Direct Consolidation Loan to simplify and reduce your payments by combining your loans into a new loan with a single monthly payment.