Direct Loans for Students
Federal Direct Loans are low-interest loans made to students.
To view the current interest rates for the program, please click here.
There are two types of Direct Loans, subsidized and unsubsidized.
A subsidized Direct Loan is available to students who have financial need.
An unsubsidized Direct Loan is an option for students who do not demonstrate financial need.
Direct Loan
For the student with financial need, the federal government pays the interest on the subsidized loan while the student is enrolled in college at least half time and for six months after the student is no longer enrolled.
At the end of the six-month period, the student becomes responsible for the loan interest and repayment.
Unsubsidized Direct Loan
While unsubsidized loans are offered to students with no financial need at the same interest rates as those loans in the subsidized program, the student with an unsubsidized loan is responsible for the interest at all times.
Students can choose to pay the interest while they are enrolled or have it added to the loan principal.
Delaying interest payment by adding to principal, however, will increase the cost of the loan.
Repayment of the principal begins six months after the student is no longer enrolled.
Eligibility
You first complete the Free Application for Federal Student Aid (FAFSA) and have your results sent to the financial aid offices of the schools to which you are applying for admission and financial assistance.
Each financial aid office then determines if you are eligible for a subsidized or unsubsidized Direct loan and, if so, includes this recommendation and loan amount in your financial aid award package.
Other eligibility requirements follow:
- Citizenship: You must be a U.S. citizen or an eligible non-citizen.
- Enrollment: You must be enrolled or accepted for enrollment at least half time at a participating school in an eligible program leading to a degree or certificate; or leading to a professional credential or certification from a state, that is required for employment as an elementary or secondary school teacher in that state; or be enrolled for not longer than a 12-month period in a course of study which has been determined as necessary for enrollment in a degree or certificate program.
- Academic: You must be maintaining satisfactory academic progress in your course of study according to your school's standards and statutory requirements.
- Non-Default: You must not be in default on an educational loan or owe a refund on an educational grant.
- High School: You must have a high school diploma or GED or pass an independently administered test, determined by your school, that demonstrates your ability to benefit from the program of study.
- Law: You must meet all of the other federal Stafford Loan program eligibility requirements prescribed by law at the time your loan application is processed.
Value
For Direct Subsidized Loans and Direct Unsubsidized Loans first disbursed between July 1, 2010 and June 30, 2011 there is a loan origination fee of 1.0% of the loan.
The fee goes to the government to help reduce the cost of the loan.
The amount students may borrow depends on their grade level in school, program length, amount of other financial aid received, and - in the case of the subsidized Stafford Loan - the amount of financial need. The annual maximums by grade level are shown below:
- $5,500 — first year of undergraduate school (no more than $3,500 may be subsidized)
- $6,500 — second year of undergraduate school (no more than $4,500 may be subsidized)
- $7,500 — third year and beyond of undergraduate school (no more than $5,500 may be subsidized)
- $20,500 — graduate/professional students (no more than $8,500 may be subsidized)
Depending on the grade level and the program length, independent students may borrow additional amounts (above these maximums) as unsubsidized Direct Loans.
Total (subsidized plus unsubsidized) lifetime maximums are listed below:
- $31,000 — dependent undergraduate students (no more than $23,000 may be subsidized)
- $57,500 — independent undergraduate students (no more than $23,000 may be subsidized)
- $138,500 — graduate students (including any undergraduate loans — no more than $65,500 may be subsidized)
Loan Disbursement
The proceeds from your federal Direct Loan will be sent to your school.
You must contact the Financial Aid Office to make arrangements to receive your loan proceeds.
Application Procedure
Once you decide which school you wish to attend and accept its offer of financial assistance, the school can certify you as eligible for a Direct Loan.
For additional information on how to apply, please check the financial aid web site at your school.
You can find the contact information for your college in the Explore Schools section.
Repaying Your Loan
Use the SLOPE (Student Loans Over Projected Earnings) calculator to determine the interest and monthly payments for your student loans based on your potential career choice.
Download loan repayment forms.