Federal Direct Loans for Undergraduate Students
These fixed-rate, federally guaranteed loans are processed through the Federal Direct Loan Program. Loans will be issued in the student’s name, and the student will be responsible for repayment.
To be eligible, students must be admitted into an undergraduate degree program and must be enrolled in a minimum six credit hours of degree-level, eligible coursework.
Eligibility for Federal Direct subsidized loans is based on financial need as determined by the FAFSA, and maximum subsidized loan eligibility will be processed prior to determining unsubsidized loan amounts.
There are of two types of Federal Direct Loans:
- Subsidized loans – Interest is not charged on the loan until enrollment ends, after which it will accrue at a 4.29% fixed rate for 2015-16. Federal regulations limit student eligibility for subsidized loans to 150% of the time needed to complete their degree (learn more about this limit rule from Federal Student Aid).
- Unsubsidized loans – Interest accrues while in school, with the interest rate set at a 4.29% fixed rate for 2015-16. In-school interest payments are optional, but are recommended to help reduce a student’s overall debt burden.
Federal student loans will automatically be processed and listed on award letters, and students may contact our office or use STARS to cancel/reduce loan amounts. Receiving other forms of aid (scholarships, grants, etc.) can reduce the total amount of loans a student may receive for the academic year.
For loans disbursed on or after October 1, 2014, and before October 1, 2015, a federal origination fee of 1.073% is deducted from each loan payment forwarded to the school by the Direct Loan Origination Center (i.e. for every $2,000 borrowed, the student receives $1,979).
For loans disbursed on or after October 1, 2015, and before October 1, 2016, the origination fee will be 1.068%.
Annual Loan Limits for Undergraduate Students
|Academic Year||Base Award (Sub/Unsub)||Additional Unsubsidized||Parent Denied PLUS Loan -OR- Independent Student|
|1st year (1-29 hours)||$3,500||$2,000||$4,000|
|2nd year (30-59 hours)||$4,500||$2,000||$4,000|
|3rd and 4th years (60+ hours)||$5,500||$2,000||$5,000|
Aggregate loan limits cap the total amount of Federal Direct Loans a student can accumulate. Keep track of your outstanding federal student loans online.
Aggregate Loan Limits for Undergraduate Students
|Undergraduate Students||Maximum for Subsidized||Combined Maximum (Sub + Unsub)|
Once a student reaches aggregate loan limits, they are no longer eligible to receive federal student loans, and may instead consider a private student loan.
Please note that, starting with new borrowers beginning on or after July 1, 2013, eligibility to receive subsidized loans will also be limited to 150 percent of the length of the student’s academic program (i.e. students in a four-year program will be eligible for subsidized student loans for the equivalent of six years).
To be considered for Federal Direct Loans, a student must submit a Free Application for Federal Student Aid (FAFSA).
Funds must be requested while the student is actively enrolled, giving a minimum one week notice to allow for processing. Federal student loans cannot be requested to pay a past due balance after enrollment has ended for that term.
Federal Direct Loans are deferred (repayment is delayed) until the student graduates, leaves school, or drops below half-time enrollment. Once deferment ends, the student will have a six-month grace period before repayment begins.
Students who may have difficulty repaying their loans should always communicate with their loan servicer and review options for postponing repayment. There are also a variety of repayment plan options for eligible students.