Federal Direct Loans

The William D. Ford Federal Direct Student Loan Program, sponsored by the U.S. Department of Education, offers low interest rates and easy repayment terms, and is geared toward those entering or re-entering the workforce. The Federal Direct Unsubsidized Loan is available to graduate students. The loan is not credit based, and only requires that students meet specific eligibility requirements. All students must file a Free Application for Federal Student Aid (FAFSA) in order for the Office of Financial Aid to determine eligibility for a Federal Direct Unsubsidized Loan. Depending on enrollment status, FAFSA results, cost of attendance, and other factors, an amount will be offered to eligible students. The federal government is the lender for student loans received through the Federal Direct Loan Program.

The Department of Education has developed a process that all Direct Loan borrowers (subsidized, unsubsidized, graduate PLUS, and parent PLUS) are encouraged to complete, called the Annual Student Loan Acknowledgement (ASLA). The ASLA (formerly known as the Informed Borrower Confirmation process) is intended to better assist borrowers in understanding the financial responsibility of funding their education and provide current information on a borrower’s cumulative loan balance. As part of the Master Promissory Note (MPN) confirmation process, the ASLA allows student and parent borrowers to view how much they currently owe in federal student loans, and to acknowledge that they have seen these amounts, before borrowing new loans each award year. The ASLA may be completed each year in addition to Direct Loan Entrance or PLUS Credit counseling that may be necessary. The ASLA becomes available for completion online at studentaid.gov/asla each April.

Borrowers are responsible for all interest that accrues on the Federal Direct Unsubsidized Loan, and have the option to pay the interest on their loans while in school or let interest accrue until repayment begins (known as capitalization). Applicants must be enrolled in at least half-time attendance (minimum six graduate-level credits per semester) to be eligible for Federal Direct Unsubsidized Loans and to maintain eligibility for “in-school” deferment status.

Graduate students may borrow up to $20,500 per academic year from the Federal Direct Unsubsidized Loan Program. If graduate students are taking undergraduate prerequisite courses, a Preparatory Coursework form must be completed with their academic advisor and submitted to the Office of Financial Aid. Enrolled graduate students taking undergraduate preparatory coursework (concurrently while in a graduate program) may be eligible to receive undergraduate Direct Subsidized and Unsubsidized Loans. The total combined undergraduate, graduate, and professional aggregate loan limit for the Direct Loan program is $138,500, of which no more than $65,500 can be subsidized.

Graduate students who qualify for Federal Direct Loans through preparatory coursework are only eligible to receive up to a total of $12,500 in Federal Direct Loans for the academic year, of which no more than $5,500 may be subsidized (depending on eligibility determined by FAFSA results). Graduate students receiving undergraduate Federal Direct Loans through preparatory coursework are subject to the undergraduate federal loan lifetime aggregate limits for independent students. Undergraduate independent students are eligible to receive up to a total of $57,500 in Federal Direct Loans for their lifetime, of which no more than $23,000 may be subsidized (depending on eligibility determined by FAFSA results).

Loan repayments will not be required while students maintain at least half-time (minimum six credits) attendance. Repayment starts six months after students leave school or drop below half-time attendance. Interest on Direct Unsubsidized Loans begin to accrue when the loan is fully disbursed, and students may start repayments at any time.

Effective for Federal Direct Loans first disbursed on or after July 1, 2006, the interest rate is fixed. Prior to this date, Federal Direct Loan interest rates were variable. Federal Direct Loan interest rates change from year to year (in July) and may also change specifically for one type or the other; Subsidized, Unsubsidized, or Graduate PLUS. For loans disbursed after July 1, 2021, the interest rate for Unsubsidized Loans is 5.28 percent. Students who received loans prior to the aforementioned dates and who still have balances outstanding on those loans will continue with the interest rate rules in effect at the time of their original loans. Borrowers will also be charged an origination fee. The origination fee represents the lender’s (the federal government) fee for making the loan. For loans disbursed after October 1, 2020 and before October 1, 2022, the origination fee is 1.057 percent.

Annual and Aggregate Graduate Limits: Direct Unsubsidized Eligibility Only

  • Annual: $20,500 (Ineligible for Subsidized Loans)
  • Aggregate: $138,500 (Including Undergraduate and Graduate Combined)

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) became law and provided emergency COVID-19 relief measures on federal student loans owned by the Department of Education. The relief measures, which began on March 20, 2020, include suspension of loan payments, stopped collections on defaulted loans, and a 0% interest rate. On December 22, 2021, the U. S. Department of Education extended the aforementioned COVID-19 emergency relief for students through May 1, 2022. On April 6, 2022, the U. S. Department of Education extended the student loan payment pause through Aug. 31, 2022. More information is available at studentaid.gov.