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Home > Types of Aid > Loans > Federal Direct Subsidized & Unsubsidized Loans

Federal Direct Subsidized & Unsubsidized Loans

Direct Subsidized and Unsubsidized Loans are low-interest loans for students to help pay for the cost of a post-secondary education. The lender is the U.S. Department of Education, although most of the contact will be with your loan servicer.

  • Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school. The Department of Education pays the interest on the loan while you are enrolled in school in at least 6 credit hours (half-time) and during the 6 month grace period that begins when you cease half-time enrollment. There is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans.
  • Direct Unsubsidized Loans are loans made to eligible undergraduate, graduate, and professional students, but in this case, the student does not have to demonstrate financial need to be eligible for the loan. Interest begins accruing on the loan at the time the funds are disbursed to your account.

The Free Application for Federal Student Aid (FAFSA) is the only application required to apply for Federal Direct Loans. You must meet all general eligibility requirements, and continue to be enrolled at least half-time (6 credit hours) to maintain eligibility.

Eligibility for subsidized loans is also based on financial need.

There are both annual and lifetime limits to the amount you are able to borrow in Direct Loan funds. Additionally, there are both dollar and time limits to the amount of subsidized loans you are able to borrow.

Annual Limits
Credit Hours Subsidized Additional Unsubsidized Total (Subsidized & Unsubsidized)
Dependent Undergraduates
First Year 0-29 $3,500 $2,000 $5,500
Second Year 30-59 $4,500 $2,000 $6,500
Third Year and Beyond 60+ $5,500 $2,000 $7,500
Aggregate ($23,000) $31,000
Independent Undergraduates
First Year 0-29 $3,500 $6,000 $9,500
Second Year 30-59 $4,500 $6,000 $10,500
Third Year and Beyond 60+ $5,500 $7,000 $12,500
Aggregate ($23,000) $57,500
Through June 30, 2012: Graduate and Professional Students* $8,500 $12,000 $20,500
Effective July 1, 2012: Graduate and Professional Students** $0 $20,500 $20,500
Aggregate ($65,500) $138,500

* Full-time Doctor of Pharmacy, Graduate in Public Health and Clinical Psychology students may be eligible for up to $12,500 in additional unsubsidized loans. Full-time Doctor of Allopathic Medicine and Doctor of Dentistry students may be eligible for up to $20,000 in additional unsubsidized loans. The lifetime aggregate for these programs is $224,000.

** Effective July 1, 2012, the Subsidized Direct Loan is no longer available to graduate/professional students.

  1. Numbers in parenthesis represent the maximum lifetime amount that may be subsidized.
  2. Students enrolled in a program of study that is one academic year or more in length, but who are in a remaining period of study that is less than a full academic year will receive a prorated loan amount.
  3. If the borrower does not have financial need for a Subsidized Loan using expected family contribution (EFC), or has reached the aggregate limit in Subsidized Loans, the borrower may receive up to this entire amount in Unsubsidized Loans assuming he/she has remaining eligibility for the loan.
  4. If your subsidized loan is disbursed during the period on or after July 1, 2012 and before July 1, 2014, you will be responsible for the interest that accrues while your loan is in the grace period.
  5. The aggregate amounts for graduate students include loans for undergraduate study.

If you are a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans. This time limit does not apply to Direct Unsubsidized Loans or Direct PLUS Loans. If this limit applies to you, you may not receive Direct Subsidized Loans for more than 150 percent of the published length of your program. This is called your maximum eligibility period. Your maximum eligibility period is generally based on the published length of your current program.

For example, if you are enrolled in a four-year bachelor’s degree program, the maximum period for which you can receive Direct Subsidized Loans is six years (150 percent of 4 years = 6 years).

Because your maximum eligibility period is based on the length of your current program of study, your maximum eligibility period can change if you change to a program that has a different length. Also, if you receive Direct Subsidized Loans for one program and then change to another program, the Direct Subsidized Loans you received for the earlier program will count toward your new maximum eligibility period.

Interest Rates (Effective on new loans made between July 1, 2017 and June 30, 2018):

  • Direct Subsidized Loan (Undergraduate): 4.45%
  • Direct Unsubsidized Loan (Undergraduate): 4.45%
  • Direct Unsubsidized Loan (Graduate and Professional): 6.00%

Interest Rates (Effective on new loans made between July 1, 2016 and June 30, 2017):

  • Direct Subsidized Loan (Undergraduate): 3.76%
  • Direct Unsubsidized Loan (Undergraduate): 3.76%
  • Direct Unsubsidized Loan (Graduate and Professional): 5.31%

Origination Fee (Effective on new loans made between October 1, 2017 and September 30, 2018):

  • Direct Subsidized and Unsubsidized Loans (All Students): 1.066%

Origination Fee (Effective on new loans made between October 1, 2016 and September 30, 2017):

  • Direct Subsidized and Unsubsidized Loans (All Students): 1.069%

First-time borrowers must complete a Master Promissory Note and Entrance Counseling before the loan funds can be disbursed.

The electronic Master Promissory Note (e-MPN) (PDF) is an agreement to pay back all borrowed Direct Subsidized or Unsubsidized Loans. Select the type of MPN that applies to the type of loan you are borrowing to prevent delays in processing.

Entrance counseling (PDF) explains what a Direct Loan is and how the loan process works. The counseling also provides:

  • How to manage your education expenses;
  • Other financial resources to consider to help pay for your education; and
  • Your rights and responsibilities as a borrower.

Entrance Counseling Guide for Direct Loan Borrowers (PDF)

You will be required to complete exit counseling (PDF) once you cease to be enrolled at least half-time (6 credit hours). The exit counseling will explain the next steps of the loan which includes explaining the purpose of the loan servicer and reviewing the various repayment plans available to you.

Exit Counseling Guide for Direct Loan Borrowers (PDF)

If you decide to cancel all or part of your loan, you must notify us by submitting a Loan Revision Request form. If you have already received a refund check, you must return the check along with the form.

Your loans will be deferred while you are enrolled at least half-time (6 credit hours) and for a 6 month grace period after you cease half-time enrollment.

During your grace period, you will receive repayment information from your loan servicer. If you have any trouble repaying a loan at any time, contact your loan servicer immediately. The servicer can help you determine if there is a more suitable repayment plan, or discuss deferment or forbearance options if you need to temporarily stop payments.

Certain circumstances might lead to your loans being forgiven, canceled or discharged. Contact your loan servicer for more information regarding eligibility and how to apply for loan forgiveness, cancellation or discharge.

A Direct Consolidation Loan allows you to consolidate (combine) multiple federal loans into one loan. The result is a single monthly payment instead of multiple payments. Contact the Loan Consolidation Information Center at 1-800-557-7392 to ask questions before you apply for a Direct Consolidation Loan.

Information is subject to change without notice due to changes in federal, state and/or institutional rules and regulations. Students must complete a FAFSA every year. Students must be making satisfactory academic progress to continue to receive financial aid.