Federal loans
Overview
The U.S. Department of Education’s federal student loan program is the William D. Ford Federal Direct Loan (Direct Loan) Program.
Through this program, you can access low-interest loans issued directly by the U.S. Department of Education as your lender.
Types of federal loan
There are two kinds of federal loan available:
- Direct Subsidized Loans – available to undergraduate students in financial need.
- Direct Unsubsidized Loans – available to undergraduate and graduate students; there is no requirement to demonstrate financial need.
Direct Subsidized Loans and Direct Unsubsidized Loans are sometimes referred to as Stafford Loans or Direct Stafford Loans, but these aren’t the official loan names.
Direct subsidized loan
These loans for undergraduate students in financial need are available interest-free while you are studying.
Your school determines the amount you can borrow, and the amount may not exceed your financial need.
The U.S. Department of Education pays the interest on a Direct Subsidized Loan:
- while you’re in school at least half-time
- for the first six months after you leave school (referred to as a grace period*); and
- during a period of deferment (a postponement of loan payments).
Direct unsubsidized loans
While there is no need to demonstrate financial need for these loans, your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.
Unlike subsidized loans, you are responsible for paying the interest on a Direct Unsubsidized Loan at all times.
Borrowing limits
The U.S. Department of Education has set borrowing limits for Subsidized and Unsubsidized Loans:
| Subsidized | Unsubsidized | Total | |
|---|---|---|---|
| Dependent Undergraduates | |||
| Year 1 | $3,500 | $2,000 | $5,500 |
| Year 2 | $4,500 | $2,000 | $6,500 |
| Year 3+ | $5,500 | $2,000 | $7,500 |
| Independent Undergraduates | |||
| Year 1 | $3,500 | $6,000 | $9,500 |
| Year 2 | $4,500 | $6,000 | $10,500 |
| Year 3+ | $5,500 | $7,000 | $12,500 |
| Graduate/Professional | |||
| Per academic year | $20,500 | $20,500 |
The total aggregate loan limit from all Direct Loans combined at any one time is:
- $31,000 for dependent undergraduate students, excluding those whose parents are unable to borrow a PLUS Loan (no more than $23,000 may be Subsidized)
- $57,500 for independent undergraduate students and dependent undergraduates whose parents are unable to borrow a PLUS loan (no more than $23,000 may be Subsidized)
- $138,500 for graduate or professional students (no more than $65,500 may be Subsidized; includes loans for undergraduate study).
Interest rates for July 1, 2022 – June 30, 2023
| Interest Rate | Undergraduate | Graduate |
|---|---|---|
| Subsidized Loan | 4.99% | N/A |
| Unsubsidized Loan | 4.99% | 6.54% |
| PLUS | 7.54% | 7.54% |
The interest rates shown above are fixed rates for the life of the loan.
Origination fees
| Origination Fee | Oct 1, 2022 - Sept 30, 2023 |
|---|---|
| Subsidized Loan | 1.057% |
| Unsubsidized Loan | 1.057% |
| PLUS | 4.228% |
Find out more
Find out more about Federal Direct Subsidized and Unsubsidized loans on the Federal Student Aid website.