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William D. Ford Federal Direct Loans

Federal Direct Loans are fixed-rate, low interest loans available to degree-seeking undergraduate and graduate students attending accredited schools at least half time. They are the most common source of college loan funds. There are two types of Direct Loans:

  • Subsidized Direct Loans are need-based, and the government pays the interest on these loans while you are in school. Subsidized loans are only available to undergraduate students.
  • Unsubsidized Direct Loans are not need-based, and you are responsible for all of the interest that accrues on the loan, including while you are in school.

Direct Loan Origination Fees

An origination fee is an expense of borrowing a Federal Direct loan and is subtracted from the total loan amount prior to disbursement. The borrower is responsible for repaying the total loan amount. 

 

Any Federal loans that disburse on or after October 1, 2020 and before October 2021 will have an origination rate of 1.057% for Direct Loans and 4.228% for Parent and Graduate PLUS Loans. 

 

Any Federal loans that disburse on or after October 1, 2021 will have an origination rate of 1.057% for Direct Loans and 4.228% for Parent and Graduate PLUS Loans. 

Examples:

A Direct Subsidized or Direct Unsubsidized Loan award of $5,500 disbursed on or after October 1, 2020 would have an origination rate of 1.057% which equals a fee of $58.14 subtracted from the total disbursement. The student would receive a disbursement of $5,441.86, but would be responsible for repaying the full $5,500.

 

A Direct Subsidized or Direct Unsubsidized Loan award of $5,500 disbursed on or after October 1, 2021 would have an origination rate of 1.057% which equals a fee of $58.14 subtracted from the total disbursement. The student would receive a disbursement of $5,441.86, but would be responsible for repaying the full $5,500.

 

A Parent or Graduate PLUS Loan of $10,000 disbursed on or after October 1, 2020 would have an origination rate of 4.228% which equals a fee of $422.80 subtracted from the total disbursement. The student or parent would receive a disbursement of $9,577.20, but would be responsible for repaying the full $10,000.

Direct Subsidized Loan Limit

The FAFSA Simplification Act repeals the 150% Subsidized Usage Limit Applies (SULA) requirements. The repeal is effective for all Direct Loans first disbursed on or after July 1, 2021. It is not limited to new borrowers; it is loan-specific. Therefore, for the 2021–2022 academic year, it is possible for a student that has reached the 150% Subsidized Usage Limit, to regain Federal Subsidized Loan eligibility for the 2021–2022 academic year as long as the student has not reached the $23,000 total borrowing limit for Federal Subsidized Loans. 

 

SULA still applies to Direct Subsidized Loans first disbursed before July 1, 2021, but the U.S. Department of Education will retroactively restore the subsidy and remove accrued interest on the older loans, even if those borrowers don't borrow again.

 

For more information, please visit the Federal Register.

 

Get additional information and examples of enrollment that may require the borrower to be responsible for interest.


Federal regulations limit the dollar amount a student may receive in an academic year from a Federal Subsidized Loan (see chart below for limits). To view your federal student loan history, visit the National Student Loan Data System (NSLDS) and log in with your FAFSA ID and PIN.

Annual Loan Limits for Direct Subsidized and Unsubsidized Loans

Loan limits are for a full academic year (fall, spring and summer). You may not receive more than half of each loan limit per term up to the annual limit at your academic level.

 

Year Dependent Studentsa Independent Studentsa
Freshman (0-29 credit hours) $5,500 (maximum $3,500 subsidized) $9,500 (maximum $3,500 subsidized)
Sophomore (30-59 credit hours) $6,500 (maximum $4,500 subsidized) $10,500 (maximum $4,500 subsidized)
Junior and beyondb (60+ credit hours) $7,500 (maximum $5,500 subsidized) $12,500 (maximum $5,500 subsidized)
Teacher Certification (after Bachelor's degree) $5,500 $12,500 (maximum $5,500 subsidized)
Graduate and Professional N/A $20,500 (unsubsidized only)

 

Aggregate Loan Limits: Maximum Total Outstanding Loan Debt
Student Level Dependent Students Independent Studentsc
Undergraduate $31,000 (maximum $23,000 subsidized) $57,500 (maximum $23,000 subsidized)
Graduate and Professional N/A $138,500
  1. Dependent students whose parents are unable to borrow PLUS Loans are eligible to apply for the Independent undergraduate loan limits.
  2. Second Bachelor candidates are treated as Undergraduate students for purposes of determining loan limits.
  3. The Graduate/Professional maximum includes Stafford Loans received for undergraduate study.

For more information regarding Federal Direct Loans, please visit Federal Student Aid's loan webpage.