Types of Aid

The U.S. Department of Education administers several loan programs designed to offer low-interest funding to students who need to borrow money to cover the costs of education. One such program is the Federal Direct Loan program. In order to qualify for a Direct Loan, you must complete the FAFSA and meet the basic eligibility requirements for Title IV Financial Aid, be enrolled at least half-time, complete Direct Loan Entrance Counseling, and sign a Master Promissory Note.

The Federal Direct Loan Program is intended solely to aid students pursuing a degree in higher education. Borrow only the amount you believe is necessary to pay for educational costs. Keeping the amount of a loan at a minimum will ease repayment.

Subsidized and Unsubsidized Direct Loans

• A subsidized loan is awarded on the basis of financial need. The federal government pays the interest while a student is in school and during grace and deferment periods.
• An unsubsidized loan is not awarded on the basis of need. You’ll be charged interest from the time the loan is disbursed until it’s paid in full. If you allow the interest to accrue while you’re in school or during other periods of nonpayment, it will be capitalized—that is, the interest will be added to the principal amount of your loan, and additional interest will be based on that higher amount.

Interest Rates and Fees

The Direct Loan interest rate and origination fees vary depending on the date of disbursement. For up-to-date interest rates visit https://studentaid.gov.

Annual Loan Limits for Direct Loans

Federal Direct Loans have both annual limits and lifetime limits for what a student is permitted to borrow. These limits are based on an undergraduate’s classification (e.g. freshman, sophomore, junior, or senior) and whether a student is considered Dependent or Independent, based on results from the FAFSA application. Graduate students do not have Dependent or Independent distinctions, but do have different limits than undergraduate students. Lifetime maximum limit debt allowed includes all outstanding Federal Direct Loans borrowed at other institutions.

Dependent Undergraduate Student:

• 1st Year Freshman (1 – 29 Credits): $5,500 – only $3,500 may be subsidized
• 2nd Year Sophomore (30 – 59 Credits): $6,500 – only $4,500 may be subsidized
• 3rd and 4th Years Junior/Senior (60+ Credits): $7,500 – only $5,500 may be subsidized
• Lifetime Maximum Limit $31,000 – only $23,000 may be subsidized

Independent Undergraduate Student:

• 1st Year Freshman (1 – 29 Credits): $9,500 – only $3,500 may be subsidized
• 2nd Year Sophomore (30 – 59 Credits): $10,500 – only $4,500 may be subsidized
• 3rd and 4th Years Junior/Senior (60+ Credits): $12,500 – only $5,500 may be subsidized
• Lifetime Maximum Limit $57,500 – only $23,000 may be subsidized

Graduate Students:

• Each Academic Year: $20,500 – graduate students are only eligible to receive unsubsidized loans.
• Lifetime Maximum Limit $138,500 – only $65,500 may be subsidized

Federal PLUS Loans