Federal Student Loan Options for Undergraduate Students
IMPORTANT NOTE: It is our firm belief that families should borrow only when absolutely necessary, and then only to the extent that is needed. We encourage that serious and deliberate consideration be given to making any borrowing decision.
If you want to add a federal student loan to your financial aid award package, then email email@example.com and request the loan amount. This will initiate the process. See the link below for specific details on the loan process.
Information about your loans will be reported to the National Student Loan Data System (NSLDS). Information in NSLDS is accessible to schools, lenders, and guarantors for specific purposes authorized by the Department of Education.
How do I apply for this loan and am I eligible?
We ask that you first read all of the following information about Federal Direct Subsidized/Unsubsidized Loans. You may then contact our office at firstname.lastname@example.org and request the federal student loan amount and ask any additional questions. Please note that students must meet federal eligibility requirements to qualify for these loans.
If you have received a financial aid notification letter from our office and a Federal Direct Subsidized/Unsubsidized Loan has already been awarded to you, you may begin the application process. Please proceed to the U.S. Department of Education's website, http://studentloans.gov, to complete the Federal Direct Subsidized/Unsubsidized Loan Master Promissory Note and Entrance Counseling. You will need your FSA ID in order to login to the website.
How much can I borrow?
Your eligibility is determined for either a Federal Direct Subsidized and/or Unsubsidized Loan. A Federal Direct Subsidized Loan is awarded on the basis of federal eligibility. If you are eligible for such a loan, the government will pay (subsidize) the interest on your loan while you are enrolled in school on at least a half-time basis. Depending on your federal eligibility, you may borrow a Federal Direct Subsidized Loan in an amount up to the annual loan borrowing limit for your level of study (see below).
You may receive a Federal Direct Unsubsidized Loan in addition to the Federal Direct Subsidized Loan or if you don't have demonstrated federal eligibility. Unlike a Federal Direct Subsidized loan, you are responsible for the interest from the time the unsubsidized loan is disbursed until it's repaid in full. You can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will obviously increase the amount you will have to repay over the life of the loan.
You can receive both a Federal Direct Subsidized and Unsubsidized Loan for the same enrollment period as long as the combined amount of the two loans doesn't exceed the annual loan limit as delineated below.
Borrowing limits applicable to eligible dependent undergraduate students:
- As a first-year student, you can borrow up to $5,500 in combined Subsidized and Unsubsidized Loans, with a maximum of $3,500 being in the form of a Subsidized Loan (providing that you are eligible for Subsidized Loan assistance).
- As a second-year student, you can borrow up to $6,500 in combined Subsidized and Unsubsidized Loans, with a maximum of $4,500 being in the form of a Subsidized Loan (providing that you are eligible for Subsidized Loan assistance).
- As a third, fourth, or fifth-year student, you can borrow up to $7,500 in combined Subsidized and Unsubsidized Loans, with a maximum of $5,500 being in the form of a Subsidized Loan (providing that you are eligible for Subsidized Loan assistance).
The annual borrowing limits can be increased for students who meet the criteria to be considered independent for student financial aid purposes or whose parents have applied for and who were denied a Federal Direct PLUS Loan (see Federal Direct PLUS Loan information below).
What is the interest rate and what fees are charged for these loans?
Effective July 1, 2019, the interest rate for Federal Direct Subsidized/Unsubsidized Loans (Undergraduates) is fixed at 4.53%. For Federal Direct Subsidized and Unsubsidized Loans, there is an origination fee of 1.062% of the loan amount that will be deducted proportionately at each disbursement.
When do I begin repaying the loan?
Repayment of Federal Direct Loans plus any accumulated interest begins six months (called the grace period) after you drop below half-time enrollment status (normally, this occurs when you graduate or if you leave school for some other reason).