Federal Direct Loan Overview
- The Federal Direct Loan program includes the Federal Direct Subsidized Loan and the Federal Direct Unsubsidized Loan.
- Subsidized loan eligibility is based on your financial need which is determined by your FAFSA results. Generally, eligibility for a Subsidized Direct Loan is based on your FAFSA EFC and the amount of grants and scholarships you receive. The Financial Aid Office will determine your Federal Direct Loan eligibility after reviewing your FAFSA.
- Federal Direct Loan limits (the maximum amount a student can borrow) are set by the U.S. Department of Education.
- You must be enrolled at least half-time to be eligible to receive a Federal Direct Loan.
Steps to Receiving Your Federal Direct Loan(s)
- Accept your loan(s) in your Voyager account.
- Complete Entrance Counseling - Entrance counseling will walk you through the Direct Loan process and explain your rights and responsibilities as a borrower.
- Complete Master Promissory Note - The Master Promissory Note (MPN) is a legal document in which you promise to repay your loans and any accrued interest and fees to the U.S. Department of Education. It explains the terms and conditions of your loan(s).
You are only required to complete Entrance Counseling and the MPN once. If you previously borrowed a Federal Direct Loan at Lawrence, you do not need to complete these steps again.
Federal Direct Loan Interest Rates & Fees for Undergraduate Students
The interest rate for the Federal Direct Loan is fixed and based on the academic year it is borrowed. Interest begins to accumulate on the date of the first loan disbursement. The origination fee is deducted from each disbursement.
Interest Rates for Direct Subsidized Loans & Unsubsidized Loans
| Academic Year | Direct Subsidized Loans | Direct Unsubsidized Loans |
|---|---|---|
| 7/1/2025 - 6/30/2026 | 6.39% | 6.39% |
| 7/1/2024 - 6/30/2025 | 6.53% | 6.53% |
| 7/1/2023 - 6/30/2024 | 5.50% | 5.50% |
| 7/1/2022 - 6/30/2023 | 4.99% | 4.99% |
| 7/1/2021 - 6/30/2022 | 3.73% | 3.73% |
| 7/1/2020 - 6/30/2021 | 2.75% | 2.75% |
| 7/1/2019 - 6/30/2020 | 4.53% | 4.53% |
| 7/1/2018 - 6/30/2019 | 5.05% | 5.05% |
| 7/1/2017 - 6/30/2018 | 4.45% | 4.45% |
| 7/1/2016 - 6/30/2017 | 3.76% | 3.76% |
Loan Fees for Direct Subsidized Loans & Direct Unsubsidized Loans
| First Disbursement Date | Loan Fee |
|---|---|
| On or after Oct. 1, 2020, and before Oct. 1, 2025 | 1.057% |
| On or after Oct. 1, 2019, and before Oct. 1, 2020 | 1.059% |
| On or after Oct. 1, 2018, and before Oct. 1, 2019 | 1.062% |
| On or after Oct. 1, 2017, and before Oct. 1, 2018 | 1.066% |
What is the Difference Between Subsidized and Unsubsidized Loan?
Federal Subsidized Loan
The Federal Direct Subsidized Loan is awarded to students who demonstrate financial need as determined by the FAFSA. Interest on a Direct Subsidized Loan is paid by the federal government while the student is enrolled at least half-time, during deferment periods and, for loans disbursed before July 1, 2012, during the 6-month grace period. Repayment begins 6 months after a student graduates or is no longer enrolled at least half-time (8 units).
Federal Direct Unsubsidized Loan
You are not required to demonstrate "financial need" to receive a Unsubsidized Direct Loan. Interest begins accruing on the loan at the time of disbursement. The student has the option to make interest payments during the in-school period, or to allow the accrued interest to be capitalized (added on) to the principal balance. Repayment begins 6 months after a student graduates or is no longer enrolled at least half-time (8 units).
Frequently Asked Questions
| Federal Direct Subsidized Loan | Federal Direct Unsubsidized Loan | |
|---|---|---|
| Is interest charged when the student is enrolled in school? | No - interest does not accrue when the student is enrolled in school. | Yes - interest accrues when the student is enrolled in school. |
| Is interest charged during deferment? | No. | Yes. |
| Is interest charged during the grace period? | No. | Yes. |
| Is interest charged during repayment? | Yes. | Yes. |
Federal Direct Loan Limits for Dependent Students
Federal Direct Loan limits (the maximum amount a student can borrow) are set by the U.S. Department of Education. To find more information on this, you can click here.
The maximum aggregate undergraduate federal direct loan limit is $31,000. Out of this amount, only $23,000 can be in the subsidized loan program.
| Grade Level | Maximum Subsidized Amount | Additional Unsubsidized Amount | Maximum Direct Loan Amount |
|---|---|---|---|
| Freshmen (0-47 units) | $3,500 | $2,000 | $5,500 |
| Sophomore (48-101 units) | $4,500 | $2,000 | $6,500 |
| Junior & Beyond (102+ units) | $5,500 | $2,000 | $7,500 |
Federal Direct Loan Limits for Independent Students & Dependent Students Whose Parents are Unable to Qualify for PLUS Loan
The maximum aggregate undergraduate federal direct loan limit for independent students and dependent students whose parents are unable to qualify for a PLUS Loan is $57,500. Out of this amount, only $23,000 can be in the subsidized loan program.
| Grade Level | Maximum Subsidized Amount | Additional Unsubsidized Amount | Maximum Direct Loan Amount |
|---|---|---|---|
| Freshman (0-47 units) | $3,500 | $6,000 | $9,500 |
| Sophomore (48-101 units) | $4,500 | $6,000 | $10,500 |
| Junior & Beyond (102+ units) | $5,500 | $7,000 | $12,500 |
See Your Federal Student Loan Repayment Options with the Loan Simulator.