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Federal Loans

You’ll likely discover that the education secured by a loan is worth every penny … and then some. Even though they’ll need to be repaid, with interest, federal student loans are often the most affordable loans available to you, with fixed interest rates and deferred principal and interest payments until after you graduate.

William D. Ford Federal Direct Loan
Federal Direct Loans are fixed-rate student loans for undergraduate and graduate students attending college at least half time. Direct Loans are made available to U.S. citizens or permanent residents who complete the FAFSA. Repayment of principal and interest begins six months after a student ceases to be enrolled for at least half time.

Subsidized Direct Loan: Students need to demonstrate financial need to obtain this loan. Interest is paid by the federal government while a student is enrolled at least half time. Graduate students are not eligible to receive subsidized Direct Loans.  

Unsubsidized Direct Loan: Students don’t need to demonstrate financial need to receive this loan. Interest accrues while one is in school (once the loan is disbursed), as well as grace and deferment periods. The student will be sent quarterly statements and will have the option of paying the interest as it accrues while in school. If they don’t pay the interest as it accrues, the unpaid interest will be capitalized (added to the principal balance) at repayment, in the grace period or after deferment.

Academic Year Direct Subsidized Loans (Undergraduate) Direct Unsubsidized Loans (Undergraduate)
2022-2023 4.99% 4.99%
2021-2022 3.73% 3.73%
2020-2021 2.75% 2.75%
2019-2020 4.53% 4.53%
2018-2019 5.05% 5.05%

Loan Fees
Loan fees will be deducted proportionately from each loan disbursement.  This fee is retained by the government to help reduce the cost of the loan.

Loan Fees for Direct Subsidized Loans and Direct Unsubsidized Loans
First Disbursement Date Loan Fee
On or after Oct. 1, 2020, and before Oct. 1, 2022 1.057%
On or after Oct. 1, 2019, and before Oct. 1, 2020 1.059%
On or after Oct. 1, 2018, and before Oct. 1, 2019 1.062%
On or after Oct. 1, 2017, and before Oct. 1, 2018 1.066%

Loans first disbursed prior to Oct. 1, 2016, have different loan fees.

Repayment begins six months after a student graduates or ceases to be enrolled at least half time. Learn more about repayment. Explore your federal student loan repayment options.

Direct Loan Requirements
Students are required to complete the following loan requirements before receiving a Federal Direct Loan:

  • Entrance loan counseling: Entrance counseling will explain the direct loan process and describe the student's rights and responsibilities as a borrower. All first-time direct loan borrowers must complete entrance counseling before their loans can be disbursed. You can complete entrance counseling online.
  • Master Promissory Note (MPN): The Master Promissory Note is a legal document in which the student promises to repay their loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s); for instance, it will include information on how interest is calculated and what deferment and cancellation provisions are available to you. You can complete the MPN online.
  • Annual Student Loan Acknowledgement (ASLA): This is recommended for all student loan borrowers. If this is the first time you are accepting a federal student loan, you are acknowledging your responsibility to repay your loan. If you have existing federal student loans, you are acknowledging that you understand how much you owe and how much more you can borrow. You can complete the Annual Student Loan Acknowledgement online. 
Before a student (or once a student notifies us they will) withdraws, graduates or drops below half-time attendance (regardless of plans to transfer to another school), regulations require that Federal Direct Loan borrowers complete exit loan counseling.

Annual and aggregate loan limits for undergraduate students
The combination of subsidized and unsubsidized Federal Direct Loans for a borrower may not exceed the annual and aggregate limits for loans under the federal loan program.

Loan limits for subsidized and/or unsubsidized loans are:

Year Dependent Undergraduate Students 
(except students whose parents are unable to obtain PLUS Loans)
Independent Undergraduate Students 
(and dependent students whose parents are unable to obtain PLUS Loans)
First year $5,500 – no more than $3,500 of this amount may be in subsidized loans. $9,500 – No more than $3,500 of this amount may be in subsidized loans.
Second year $6,500 – no more than $4,500 of this amount may be in subsidized loans. $10,500 – No more than $4,500 of this amount may be in subsidized loans.
Third and beyond (each year) $7,500 – No more than $5,500 of this amount may be in subsidized loans. $12,500 – No more than $5,500 of this amount may be in subsidized loans.
Maximum total debt from Direct Loans when you graduate
(aggregate loan limits)
$31,000 – No more than $23,000 of this amount may be in subsidized loans. $57,500 – No more than $23,000 of this amount may be in subsidized loans.

These annual loan limit amounts are the maximum yearly amounts one can borrow in both subsidized and unsubsidized loans. Students can have one type of loan or a combination of both depending on their financial need. Because students are unable to borrow more their the cost of attendance minus any other financial aid they’ll receive, they may receive less than the annual maximum amounts. Also, the annual loan limits assume that their program of study is at least a full academic year. If the remaining portion of their program of study is less than a full academic year, their loans are required to be prorated.

For undergraduates, loan limits (based on year in school) are calculated on having earned the following number of credits:
  • First year: 0-27 credits
  • Second year: 28-55 credits
  • Third year and beyond: 56+ credits

If a student progresses to a new class standing (year in school) during the academic year, the student must contact the office of financial aid to request any possible increase to their loan limits.

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