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Federal Direct Loans

Student loans are financial obligations that must be repaid.  Students are encouraged to only borrow what they need to cover their educational expenses.  

Federal Subsidized Direct Loans

Federal Subsidized Direct Loans are awarded to students that demonstrate financial need.  Interest is deferred while the student is enrolled in school on at least a half-time basis (6 or more credits) and during the grace period.  

Repayment of loan principal and interest begins six months after enrollment falls below half-time, and is usually calculated over a maximum 10-year period. 

The current in-school interest rate paid by the government is fixed at 5.05% [For loans disbursed on or after July 1, 2018].

Federal Unsubsidized Direct Loans

Students that do not qualify for need based assistance may qualify for the Federal Unsubsidized Direct Loan.  Unlike the Federal Subsidized Direct Loans, this loan type will accrue interest during enrollment, the grace periods, and during periods of repayment or deferment.  The borrower may make interest only payments while in school or can request that the loan servicer add the interest to the principal amount of the loan.   

The interest rate for undergraduates is 5.05% and for graduate students is 6.60% [For loans disbursed on or after July 1, 2018].

Federal Direct PLUS Loans (Parents/Graduate Students)

To received a Direct PLUS Loan, you must be a graduate student enrolled at least half-time at an eligible school in a program leading to a graduate degree or be the parent of a dependent undergraduate student enrolled at least half-time.  Additionally, you must not have an adverse credit history.  

The interest rate for Direct PLUS Loan borrowers is 7.60% [For loans disbursed on or after July 1, 2018].

Entrance Counseling

If you are a first time borrower of a Direct Subsidized, Unsubsidized, or Graduate PLUS Loan, you are required to complete entrance counseling at www.studentloans.gov.  During entrance counseling you will learn what a direct loan is, how the process works, your rights and responsibilities as a borrower, how to manage your educational expenses and about other financial resources that may help pay for your education. 

Loan Agreement (MPN)

If you are a first time borrower of a Direct Subsidized, Unsubsidized, or Graduate PLUS Loan, you are required to also complete a Loan Agreement (MPN) at www.studentloans.gov.  The MPN is a legal document through which you promise to repay your Direct Loans and any accrued interest and fees to the Department of Education.  It also explains the terms and conditions of your loans.  A Direct Loan MPN can be used to make loans for up to 10 years.  

Loan limits for undergraduate and graduate students are detailed respectively in the following two tables.

Federal Direct Loan Limits for Undergraduate Students - Subsidized and Unsubsidized
Dependent 1Independent 2
First Year - Freshman $5,500 ($3,500)3 $9,500 ($3,500)
Second Year - Sophomore $6,500 ($4,500) $10,500 ($4,500)
Third and Fourth Year - Junior and Senior $7,500 ($5,500) $12,500 ($5,500)
Credential, PHAP, and Unclassified Post Baccalaureate $5,500 ($5,500) $12,500) ($5,500)
Aggregate $31,000 ($23,000) $57,500 ($23,000)

1 Except those students whose parents are denied a PLUS loan.
2 These limits also apply to dependent students whose parents are denied a PLUS loan.
3 The numbers in parentheses represent the maximum Subsidized loan amounts.

Federal Direct Loan Limits for Graduate Students
Subsidized and Unsubsidized Loans for loan periods beginning before July 1, 2016Subsidized and Unsubsidized Loans for loan periods beginning on or after July 1, 2016
Each Year $20,500 ($8,500) $20,500
Aggregate $138,500 1($65,500) $138,00 1($65,500)

1 The aggregate amounts for graduate students include loans borrowed during undergraduate study.

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