Federal Direct Loans

Overview

The federal Direct loan is the most widely-used loan for college students and is available to both graduate and undergraduate students. There are two types of federal Direct loans and your eligibility for both is determined using your financial aid application.

• Direct subsidized loans are interest-free while you are enrolled in college at least half-time.
• Direct unsubsidized loans accrue interest while you are enrolled. You can choose to pay the interest each month while in school, or allow the interest to accumulate.
  

Borrowing limits for each academic year depend on your class level:

• $5,500 Freshmen (maximum $3,500 may be subsidized)
• $6,500 Sophomores (maximum $4,500 may be subsidized)
• $7,500 Juniors/Seniors (maximum $5,500 may be subsidized)
• $20,500 Graduate Students—Unsubsidized

Interest rates and fees

Direct subsidized:

• 0% interest rate while you are enrolled at least half-time
• 3.4% interest rate during a six-month grace period after you leave school and during repayment
  NOTE: Under current law, the interest rate during grace and repayment will increase to 6.8% for loans first disbursed on or after 7/1/2013. This may change, pending Congressional action.
• 1.0% origination fee will be deducted from each disbursement
  NOTE: Due to federal sequestration, the origination fee has increased to 1.051% for loans first disbursed after 3/1/2013. The U.S. Department of Education will contact affected borrowers directly with information about paying the increased origination fee.

Direct unsubsidized:

• 6.8% interest rate while you are enrolled at least half-time, during a six-month grace period after you leave school, and during repayment
• 1.0% origination fee will be deducted from each disbursement
  NOTE: Due to federal sequestration, the origination fee has increased to 1.051% for loans first disbursed after 3/1/2013. The U.S. Department of Education will contact affected borrowers directly with information about paying the increased origination fee.

No credit check required. If you are not in default on a prior educational loan, do not owe a repayment of federal grant funds, and meet federal aid eligibility requirements, you will be approved to borrow the Direct loan.

No payments required while you are enrolled at least half-time. Repayment begins six months after you graduate or drop below half-time enrollment. The standard repayment period is ten years. You can apply for temporary deferment of payments if you enroll in graduate school at least half-time, become unemployed, experience economic hardship, or meet other approved criteria. For more information, please see our web page on loan repayment.