The direct loan program has low interest loans that undergraduates, graduates and parents of dependent students may obtain from the Department of Education. This program includes the Federal Subsidized Stafford Loan, the Federal Unsubsidized Stafford Loan. These loan programs were created by Congress to help all eligible students and parents, with and without financial need, pay for the student’s educational expenses.
There are two types of Federal Direct Loans, subsidized and unsubsidized.
- Subsidized Loans: Subsidized loans are awarded on the basis of financial need. Financial need is determined by subtracting the Estimated Family Contribution (EFC), provided from the FAFSA, from the cost of attendance. If your financial need is not fully met through other forms of aid (including grants and scholarships), you are eligible for Subsidized Loan funds up to the remaining amount of your financial need or up to the loan limits based on your grade level, whichever amount is lower. The Federal Government will pay interest on a subsidized loan while you are in school and during your six-month grace period.
- Unsubsidized Loans: If you do not demonstrate financial need, you are eligible for a Federal Unsubsidized Direct Loan. If you accept the unsubsidized loan, interest will accrue while you are enrolled. You have the option of paying the interest while you are enrolled.
Loan Application Process
- Submit the FAFSA (Free Application for Federal Student Aid).
- Log in to your FA Online account and Accept your Direct Loan.
- Once you accept your loan, the Office of Financial Aid will originate the loan. Direct Loan processing for 2023-2024 will begin in August.
- First time loan borrowers must sign a Direct Loan Master Promissory Note (MPN) at studentaid.gov.
- First time Direct loan borrowers must complete Entrance Counseling at studentaid.gov.
Loan Limits
Dependent | Independent | |
Freshmen | $5,500 | $9,500 |
Sophomores | $6,500 | $10,500 |
Juniors | $7,500 | $12,500 |
Seniors/5th Year | $7,500 | $12,500 |
Graduate Students | $20,500 |
Interest Rates**
Current interest rates on all Federal Direct Loans are fixed. Undergraduates receive different interest rates for subsidized and unsubsidized loans; rates for grad students are the same whether the loan is subsidized or unsubsidized.
Undergraduates | Subsidized | 4.99% |
Undergraduates | Unsubsidized | 4.99% |
Graduates | Unsubsidized | 6.54% |
Origination Fees
An origination fee is charged by the Federal Government for Direct Loans. This fee is a percentage of the total loan amount and is deducted from each loan disbursement. You are responsible for repaying the entire amount you borrow.
Loan Type | First Disbursement Date | Loan Fee |
Direct Subsidized and Unsubsidized Loan | On or after 10/1/20 and before 10/1/23 | 1.057% |
Direct PLUS Loans | On or after 10/1/20 and before 10/1/23 | 4.228% |
Federal Direct Subsidized Loan – 150% Rule
There is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans. In general, you may not receive Direct Subsidized Loans for more than 150% of the published length of your program. This is called your “maximum eligibility period.” You can usually find the published length of any program of study in your school’s catalog.
Direct Loan Counseling
- Go to studentaid.gov.
- Select “Loan Entrance Counseling” under “Loans and Grants.” (Note: You will need your FSA ID to access the Entrance Counseling. If you do not have your FSA ID, you can create a new FSA ID here.
- Select “Log In To Start” and follow the directions.
Master Promissory Note
- Go to studentaid.gov.
- Select “Master Promissory Note (MPN) under “Loans and Grants.” (Note: You will need your FSA ID to access the MPN. If you do not have your FSA ID, you can create a new FSA ID here.
- Select “Log In To Start” and follow the directions.