• Contact
• Forms
• Cost
• Apply
• Receive/Retain
• Repay
• Types
• Resources

Related USI Links

Federal Direct Loans (Student Loans): What You Should Know

---

Federal Direct Loans are low-interest student loans, offered through the U.S. Department of Education, that assist eligible students in covering the cost of higher education.

There are two types of Direct Loans: subsidized and unsubsidized. You must have financial need to receive a subsidized loan. With a subsidized Direct Loan, the federal government will pay the interest while you are enrolled at least half-time, during your grace period, and during deferment periods. Financial need is not a requirement to receive an unsubsidized loan. Interest accrues on an unsubsidized Direct Loan starting from the date the loan is first disbursed. The student borrower may pay interest quarterly on an unsubsidized loan.

Beginning in the 2012-2013 academic year, graduate students will no longer be eligible for subsidized Direct Loans per federal regulation. Unsubsidized Direct Loans are still available.

Students must file the Free Application for Federal Student Aid (FAFSA) each year to be considered for Direct Loans.

---

Classification	Hours Earned	Annual Maximum Subsidized	Additional Unsubsidized	Annual Maximum (Dependent Students)
Freshman	<32	$3,500	$2,000	$5,500
Sophomore	32 < 63	$4,500	$2,000	$6,500
Junior	63 < 94	$5,500	$2,000	$7,500
Senior	94+	$5,500	$2,000	$7,500
Graduate		Unavailable	$20,500	$20,500 (Independent Student)

---

Students must be enrolled at least 1/2-time to receive Direct Loans.

• 6 credit hours for undergraduate students
• 4 credit hours for graduate students (graduate level courses)

In addition to the amounts listed above. Independent students with less than 63 earned hours are eligible for an additional $4000 and those with greater than 63 earned hours are eligible for an additional $5000. A dependent student whose parent is denied a Parent PLUS Loan may be eligible to borrow additional funds under the Direct Loan Program. A Loan Adjustment Form and verification of the Parent PLUS Loan denial will be required by our office. A USI financial aid counselor can provide information on additional eligibility.

Interest rates for the Direct Loan Program:

 

 

LOAN TYPE	GRADE LEVEL	First Disbursed Between 07/01/11 and 06/30/12	First Disbursed Between 07/01/12 and 06/30/13
Subsidized Loans	Undergraduate	3.40	3.40
	Graduate	6.80	Unavailable
Unsubsidized Loans	Undergraduate	6.80	6.80
	Graduate	6.80	6.80
PLUS Loans	Parent and Grad Student	7.90	7.90

 

Repayment of Direct Loans begins 6 months after graduating, dropping below 1/2 time, or leaving school.

Your monthly payment amount on a Direct Loan will vary depending on the repayment plan you choose and how much you borrowed. To see sample repayment amounts and terms, use the Direct Loan Program's Repayment Calculator.

The U.S. Department of Education charges loan fee of 1.0% of the principal amount of each Direct Loan. This fee is deducted proportionately from each loan disbursement.