Federal Direct Loan Program

The Federal Direct Loan Program is a loan program with funds being provided directly by the Department of Education. Federal Subsidized and Federal Unsubsidized Loans have a fixed interest rate of 4.45% from July 2017-June 2018. Origination and guarantee fees of 1.066 percent will be deducted from the loan amount you have accepted.

The Federal Direct Loan comes in two forms:

  • Federal Direct Subsidized Loan—This loan is need-based; interest does not accrue while you are enrolled at least part-time. Payment of principal is deferred while you are enrolled at least half-time and for six months after your enrollment drops below half-time status.
  • Federal Direct Unsubsidized Loan—This loan is non-need based; payment of the principal is deferred while you are enrolled at least half-time and for six months after your enrollment period drops below half-time status. Interest on this loan begins accruing at the time of disbursement. For the 2017-2018 academic year, the interest on an unsubsidized loan is fixed at 4.45% while you are enrolled in school. You have the option of making quarterly interest payments while in school or allowing the interest to be capitalized (added to the principal).

How to Apply - The first step in applying for a federal loan is to file the FAFSA. After a FAFSA is submitted an official financial aid award will be mailed to you. Officially accepting the federal loan offer happens by replying to the annual award letter either via your student portal or by mail.

If this is the first time the student has accepted a Federal Direct Loan, the student must also complete the following steps:

  1. Complete Loan Agreement for a Subsidized/Unsubsidized Loan (MPN): When logging in, have the student's FSA User ID, password and the names and information of at least 3 references who live at different addresses ready.  Make sure that the MPN option for Federal Direct Loan MPN for students is selected.  The MPN is valid for 10 years.  This step is waived for students who have an active MPN on file with the Department of Education.
  2. Complete Entrance Counseling.  This step is required for every first-time borrower and waived for students who have received a Federal Direct Loan within the past year.  When logging in, have the student's FSA User ID ready.  Make sure that the Entrance Counseling marked "required" is selected.

Federal Loan Limits: The maximum (combined Subsidized and Unsubsidized) annual limits for these loans are as follows:

Grade Level Subsidized Additional Unsub for Dependents Total annual limit for Independents
Freshman $3,500 $2,000 $9,500
Sophomore $4,500 $2,000 $10,500
Junior $5,500 $2,000 $12,500
Senior $5,500 $2,000 $12,500
Graduate NA NA up to $20,500 Unsubsidized