Federal Direct Loans are loans made by the U.S. Department of Education directly to students. Since July 1, 2010, most student loans are issued under this program. Federal Direct Loans are available in four distinct types:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
Who Can Borrow?
Federal Direct Loans are available to both undergraduate and graduate students, depending on the loan type and eligibility requirements:
- Undergraduate Students: Must be enrolled at least half-time and may be eligible for subsidized loans based on financial need.
- Graduate Students: Eligible for Direct Unsubsidized Loans, which are not based on financial need.
Types of Federal Direct Loans
Direct Subsidized Loans
- Eligibility: Available only to undergraduate students with proven financial need.
- Interest: The federal government pays the interest while the student is in school at least half-time.
- Repayment: Payments are not due until six months after leaving school.
- Credit Check: No credit check required.
Direct Unsubsidized Loans
- Eligibility: Available to both undergraduate and graduate students, with no financial need requirement.
- Interest: Interest accrues from the moment the loan is disbursed, even while the student is in school.
- Repayment: Payments are deferred until six months after leaving school.
- Credit Check: No credit check required.
Loan Limits and Annual Amounts
Each year, the amount a student can borrow depends on their academic standing and whether they are a dependent or independent student. The loan amount may also vary depending on whether the student’s parents are eligible for a Direct PLUS Loan.
Federal Loan Limits for Dependent Undergraduates (2023-2024)
- First-Year Students: Up to $5,500, with a maximum of $3,500 in subsidized loans.
- Second-Year Students: Up to $6,500, with a maximum of $4,500 in subsidized loans.
- Third-Year Students and Beyond: Up to $7,500, with a maximum of $5,500 in subsidized loans.
Loan Limits for Independent Undergraduates (2023-2024)
- Freshmen: Up to $9,500, including $3,500 in subsidized loans.
- Sophomores: Up to $10,500, including $4,500 in subsidized loans.
- Juniors and Seniors: Up to $12,500, including $5,500 in subsidized loans.
Graduate and Professional Students
- Annual Limit: $20,500 for most graduate students; up to $40,500 for those enrolled in specific medical training programs.
Aggregate Loan Limits
The aggregate loan limit is the total amount a student can borrow throughout their undergraduate and graduate studies through Federal Direct Loans. Once a student reaches the aggregate limit, they are no longer eligible for federal loans and must find other sources of funding, such as private loans.
- Dependent Undergraduates: Up to $31,000
- Independent Undergraduates and Dependent Students Whose Parents Are Ineligible for PLUS Loans: Up to $57,500
- Graduate and Professional Students: Up to $138,500 (or up to $224,000 for certain medical training programs, including undergraduate borrowing).
Interest Rates for Federal Direct Loans
Interest rates for Federal Direct Loans are fixed throughout the life of the loan:
- Undergraduate Students: The interest rate for Direct Loans is 5.05% for loans disbursed during the 2023-2024 academic year.
- Graduate Students: The interest rate for Direct Unsubsidized Loans is 6.60%.
