Federal Direct Loans

Overview

The federal Direct loan is the most widely-used loan for college students and is available to both graduate and undergraduate students. There are two types of federal Direct loans and your eligibility for both is determined using your financial aid application.

• Direct subsidized loans are interest-free while you are enrolled in college at least half-time and during a six-month grace period after you leave school.
• Direct unsubsidized loans accrue interest while you are enrolled. You can choose to pay the interest each month while in school, or allow the interest to accumulate.
  

Borrowing limits for each academic year depend on your class level:

• $5,500 Freshmen (maximum $3,500 may be subsidized)
• $6,500 Sophomores (maximum $4,500 may be subsidized)
• $7,500 Juniors/Seniors (maximum $5,500 may be subsidized)
• $20,500 Graduate Students (through Summer 2012, maximum $8,500 may be subsidized; loans borrowed for Autumn 2012 and thereafter will not be eligible for any subsidy)

Interest rates

Direct subsidized:

• 0% interest rate while enrolled in college at least half-time level, and during a six month grace period after you leave school
• 3.4% interest rate during repayment for undergraduate loans first disbursed between July 1, 2011, and June 30, 2012
• 6.8% interest rate during repayment for undergraduate loans first disbursed on or after July 1, 2012 (note: legislation currently pending in Congress may result in a reduction of this interest rate)
• 6.8% interest rate during repayment for Graduate students (subsidy available only for loans borrowed before Autumn 2012)

Direct unsubsidized loans have a 6.8% fixed interest rate.

For loans with a first disbursement date before July 1, 2012, net loan fees of 0.5% will be deducted from each disbursement of your loan. The net fees reflect an origination fee of 1.0% less an upfront rebate of 0.5%. For loans first disbursed on or after July 1, 2012, the rebate will no longer be available, so net fees of 1.0% will be deducted from each disbursement.

No credit check required. If you are not in default on a prior educational loan, do not owe a repayment of federal grant funds, and meet federal aid eligibility requirements, you will be approved to borrow the Direct loan.

No payments required while you are enrolled at least half-time. Repayment begins six months after you graduate or drop below half-time enrollment. The standard repayment period is ten years. You can apply for temporary deferment of payments if you enroll in graduate school at least half-time, become unemployed, experience economic hardship, or meet other approved criteria. For more information, please see our web page on loan repayment.