The William D. Ford Federal Direct Loan Program contains two components:
- Direct Subsidized Loans, need-based loans
available to undergraduate students only
- Direct Unsubsidized Loans, non-need-based loans available to undergraduate and graduate students.
The terms of the two loans are almost identical, except that the Subsidized Loan does not accrue interest as long as the borrower maintains at least half-time attendance at an eligible institution, or during the six-month grace period after such enrollment ceases. The Unsubsidized Loan always accrues interest, whether in repayment, deferment, forbearance, or while the student is in school at least half-time.
Subsidized Loans are no longer available to graduate students for award periods that begin after July 1, 2012. Unsubsidized Loans will continue to be available to graduate students.
Loan Amount & Interest Rate Information
The maximum amount of Direct Unsubsidized Loans that may be borrowed is $20,500 per two-trimester academic year.
The lifetime aggregate limit for Subsidized and Unsubsidized Loans is $138,500, of which up to $65,500 can be Subsidized Loans. These limits include loans from undergraduate study.
The interest rate for Subsidized and Unsubsidized Loans made after July 1, 2013 is a fixed rate, but the fixed rate is revised each year. A student might wind up with loans with several different fixed rates after finishing their degree. For graduate-student Unsubsidized Loans made between July 1, 2018 and June 30, 2019, the fixed rate is 6.6%.
The Unsubsidized Loan accrues interest during in-school, grace, and deferment periods, and that interest will be capitalized at repayment unless it is paid prior to repayment.
Repayment commences six months after the student stops being enrolled at least half-time at an eligible institution. If a borrower has already used their six month grace period, then repayment will begin approximately 30 days after the student stops being enrolled at least half-time.
Loan Disbursement Information
In the typical case where the loan period covers two trimesters, half of the loan amount is disbursed at the beginning of each term.
For loans with a first disbursement between October 1, 2018 and September 30, 2019, fees of 1.066% will be taken out of each disbursement.
The Federal Direct Loan Application Process
Students wishing to receive Federal Direct Loans must:
Submit a FAFSA to establish eligibility for federal student aid.
Students must also complete a CWSL Online Aid Application and specify that they wish to receive federal student loans.
Once the financial aid office has assembled the student's aid package, and the student has accepted one or more loans, the loan certification will then be electronically transmitted to the Direct Loan Servicer, who will then send a Master Promissory Note to the student for completion if one is not already on file. Promissory notes may also be completed on the StudentLoans.gov website.
Upon disbursement, the school will apply your loan proceeds directly to your student account.
First-time borrowers must complete entrance counseling at StudentLoans.gov prior to receiving funds.
Be sure to read your promissory note carefully, as it is your responsibility to understand the terms of the loans for which you are applying. Retain copies of all loan documents for your records.