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Federal Direct Subsidized and Unsubsidized Loan

The terms of the need based Federal Direct Subsidized Loan Program require that the student borrower repay, with interest, this source of financial assistance.  This program is referred to as subsidized because no interest is charged while the student is enrolled in school and during the six-month grace period. Loans disbursed after July 1, 2012 will accrue interest during the six-month grace period.

The terms of the non-need based Federal Direct Unsubsidized Loan Program require that the student borrower repay, with interest, this source of financial assistance. This program is referred to as unsubsidized because the interest is not paid by the federal government while the student is enrolled in school. Interest on Direct Unsubsidized Loans begins to accrue after disbursement of the loan funds, however, the student may choose to have the payment of the interest deferred during enrollment and later capitalized (added to principal) at the time of repayment.

Additional terms of the Federal Direct Subsidized and Unsubsidized Loan, subject to federal regulation, include:

Interest Rates and Fees Subsidized Interest Rate: 3.4% Unsubsidized Interest Rate: 6.8% Origination Fees: 1.0%* *The Federal Direct Subsidized and Unsubsidized Loans have a 1.0% origination fee, which will be deducted from the gross amount of the loan borrowed. Repayment begins six months after the student ceases to be enrolled in school on at least a half-time basis and generally extends over a 10 year period Annual borrowing limits for Dependent Students Year Subsidized Unsubsidized*** TOTAL 1 $3,500 $2,000 $5,500 2 $4,500 $2,000 $6,500 3, 4, 5 $5,500 $2,000 $7,500 ***Students choosing to borrow the additional $2,000 Unsubsidized Loan should complete the Additional Direct Unsubsidized Loan Eligibility Form. Annual borrowing limits for Independent Students**** Year Subsidized Unsubsidized*** TOTAL 1 $3,500 $6,000 $9,500 2 $4,500 $6,000 $10,500 3, 4, 5 $5,500 $7,000 $12,500 ****If a Federal Direct PLUS Loan is applied for by a parent and denied based on credit, a dependent undergraduate may borrow at the independent levels listed above. Aggregate borrowing limits Student Status Subsidized Total (Subsidized and Unsubsidized) Dependent Undergraduate# $23,000 $31,000 Independent Undergraduate $23,000 $57,500 #Excluding those whose parents are denied borrowing in the Federal Direct PLUS Loan Program.

Additional information on the Federal Direct Student Loan Program is available from the Department of Education.

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