William D. Ford Federal Direct Loan Program
Direct Subsidized Loan
Direct Subsidized Loans are available to undergraduate students enrolled at least half time that demonstrate financial need. First year undergraduate students can borrow up to $3,500, second year students $4,500, and $5,500 for third- and fourth-year students.
The interest rate is 5.50 percent for loans disbursed on or after July 1, 2023 and before July 1, 2024. Interest rates are established each year for the Direct Subsidized Loans. The interest rate established for each loan is fixed and will apply for the life of the loan.
The U.S. Department of Education pays the interest on a Direct Subsidized Loan:
- while you are in school at least half-time
- for the first six months after you leave school (referred to as a grace period)
- during a period of deferment (a postponement of loan payments)
The standard repayment period is up to 10 years. Subsidized Direct Loans, where the first disbursement is made on or after October 1, 2020, and before October 1, 2024 carry a 1.057 percent federal origination fee. Net proceeds will equal 98.943 percent of the loan amount.
Direct Unsubsidized Loan
Direct Unsubsidized Loans are available to undergraduate students; there is no requirement to demonstrate financial need. Dependent students (except students whose parents are unable to obtain Plus loans) are eligible to receive up to $2,000 for all four years.
Independent students may borrow up to an additional $6,000 per year for the first and second years of undergraduate study and up to an additional $7,000 per year for subsequent undergraduate study through the unsubsidized Direct Loan Program. Dependent students may borrow up to the same amounts through this program, but only if the student's parent is denied eligibility to borrow funds through the Federal PLUS Loan Program.
The interest rate is 5.50 percent for loans disbursed on or after July 1, 2023 and before July 1, 2024. Interest rates are established each year for unsubsidized Direct Loans. The interest rate established for each loan is fixed and will apply for the life of the loan. The origination fee is the same as specified above under the description of the Direct Subsidized Loan (1.057 percent) however, interest accrual begins immediately during in-school and deferment periods. If you choose not to pay the interest while you are in school and during grace periods, deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan).
How Much Can I Borrow?
Federal Direct Subsidized and Unsubsidized Loans have both annual loan limits and aggregate loan limits. These limits vary based on the student's grade level and dependency status. The grade level is determined by the number of credits earned by the completion of the prior academic year, while the dependency status is determined by the student's FAFSA for the current academic year.
Annual Loan Limits
The annual loan limits indicate the maximum amounts that a student may receive for an academic year. These limits are as follows:
| Grade Level | Earned Credits | Dependent Undergraduate Student | Independent* Undergraduate/Graduate Student |
|---|---|---|---|
| First-year Undergraduate | 0-29 | $5,500 - a maximum of $3,500 can be subsidized | $9,500 - a maximum of $3,500 can be subsidized |
| Second-year Undergraduate | 30-59 | $6,500 - a maximum of $4,500 can be subsidized | $10,500 - a maximum of $4,500 can be subsidized |
| Third-year and beyond Undergraduate | 60+ | $7,500 - a maximum of $5,500 can be subsidized | $12,500 - a maximum of $5,500 can be subsidized |
| Graduate | N/A | N/A | $20,500 |
* Dependent students whose parents are unable to obtain PLUS Loans may be able to borrow up to the amount of an independent student for their grade level.
Aggregate Loan Limits
The aggregate loan limit is the maximum amount that a student can borrow during their undergraduate and graduate study. The aggregate loan limits are as follows:
- Dependent undergraduate students: $31,000 (maximum of $23,000 in subsidized loans)
- Independent undergraduate students and dependent students whose parents are unable to borrow a Direct PLUS Loan: $57,500 (maximum of $23,000 in subsidized loans)
- Graduate and professional students: $138,500 (maximum of $65,500 in subsidized loans)
It is important for students to keep track of their loan amounts and plan their borrowing accordingly to ensure they stay within the annual and aggregate loan limits. This will help them manage their student loan debt effectively throughout their education.
New Borrowers
New borrowers must complete the following before loan funds will be applied to their account:
- Complete Entrance Counseling
- Sign a Master Promissory Note
Federal Direct Loan borrowers who graduate, withdraw, or drop below half-time enrollment must complete an online Exit Counseling session.