Federal Direct Loans are guaranteed loans available to qualified students. There are two types of Direct Student Loans: Subsidized and Unsubsidized. Subsidized loans are need-based and offer the feature of repayment being deferred, while an Unsubsidized loan is not need-based and requires interest to begin being repaid or capitalized immediately. Annual loan limits for each program are as follows:
|Freshmen||$5,500 (max. $3,500 subsidized)||$9,500 ($3,500)3|
|Sophomores||$6,500 ($4,500)||$10,500 ($4,500)|
|Juniors/Seniors||$7,500 ($5,500)||$12,500 ($5,500)|
1 Except those whose parents are unable to borrow a PLUS loan.
2 These limits also apply to dependent students whose parents are unable to borrow a PLUS loan.
3 The numbers in parentheses represent the maximum amount that may be subsidized.
Any combination of Subsidized and Unsubsidized loans cannot exceed the applicable student’s Unsubsidized loan limits. The amount of the loan is based on the student’s demonstrated financial need and the other components of the financial aid package. Loan instructions are provided in the financial aid package, along with information about lenders. A 1% federal default fee may be charged. Repayment begins when a student ceases to be enrolled at least half time (six hours). However, interest on the Unsubsidized Loan begins accruing the first day of school. Students are not required to make interest payments; however, they are encouraged to do so while enrolled in order to reduce the amount of interest that may be capitalized. The government pays the interest on the Subsidized Loan while the student is enrolled.