Federal Student Loan Borrowing
Direct Subsidized Loans and Direct Unsubsidized Loans are federal student loans offered by the U.S. Department of Education (ED) to help eligible students cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school. (You might see Direct Subsidized Loans and Direct Unsubsidized Loans referred to as “Stafford Loans” or “Direct Stafford Loans,” but these aren’t the official loan names.)
PLEASE NOTE THE FOLLOWING CHANGES TO BORROWING AND REPAYMENT RESULTING FROM THE PASSAGE OF THE “ONE BIG BEAUTIFUL BILL.”
- If you already have federal student loans and want to continue repaying through the IBR plan, you cannot take out another federal loan after June 30, 2026. If you do, either by applying for any additional loan or by consolidating existing loans, you will be ineligible to continue repaying through the IBR plan. You could continue to make payments through the RAP plan, however.
- If you need to consolidate any of your existing loans and would like to repay through the IBR plan, your loan consolidation must be complete by June 30. 2026. Because the consolidation process can take anywhere from 45-60+ days to complete, this would mean that you would need to consider applying for your consolidation by late March.
- If you have existing Parent PLUS loans and take out any additional Parent PLUS loans after June 30, 2026, you will be unable to repay any of your Parent PLUS loans through any income-driven plan, because Parent PLUS loans cannot be repaid through the RAP plan. This would make your existing and future Parent PLUS loans unforgivable through the Public Service Loan Forgiveness program. If any additional Parent PLUS loans are needed, the parent who has not borrowed previously should take out the new loan(s), insulating the existing PLUS loans from damage and preserving their eligibility for Public Service Loan Forgiveness.
Differences Between Direct Subsidized Loans and Direct Unsubsidized Loans
In short, Direct Subsidized Loans have slightly better terms to help out students with financial need.
Quick Overview of Direct Subsidized Loans
Who can get Direct Subsidized Loans?
Direct Subsidized Loans are available to undergraduate students with financial need.
How much can you borrow?
Your school determines the amount you can borrow, and the amount may not exceed your financial need.
Who will pay the interest?
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).
Quick Overview of Direct Unsubsidized Loans
Who can get Direct Subsidized Loans?
Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need.
How much can you borrow?
Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.
Who will pay the interest?
You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods.
Good to Know...
During periods of time when you are not required to make payments—such as while you are in school, in a deferment, or in a forbearance—your interest will accrue (accumulate) and it will in certain instances be capitalized (which means that your interest will be added to the principal amount of your loan). Whether your unpaid interest capitalizes or not, you are still responsible for paying the interest that accrues. You can always choose to pay the interest that accrues even when you are not required to make a payment.
Loan Amount Limits
Your school determines the loan type(s), if any, and the actual loan amount you are eligible to receive each academic year. However, there are limits on the amount in subsidized and unsubsidized loans that you may be eligible to receive each academic year (annual loan limits) and the total amounts that you may borrow for undergraduate and graduate study (aggregate loan limits). The actual loan amount you are eligible to receive each academic year may be less than the annual loan limit. These limits vary depending on
- what year you are in school and
- whether you are a dependent or independent student.
If you are a dependent student whose parents are not eligible for a Direct PLUS Loan, you may be able to receive additional Direct Unsubsidized Loan funds.
The following chart shows the annual and aggregate limits for subsidized and unsubsidized loans.
| Year | Dependent Students (except students whose parents are unable to obtain PLUS Loans) | Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS Loans) |
|---|---|---|
| First-Year Undergraduate Annual Loan Limit | $5,500-No more than $3,500 of this amount may be in subsidized loans. | $9,500-No more than $3,500 of this amount may be in subsidized loans. |
| Second-Year Undergraduate Annual Loan Limit | $6,500-No more than $4,500 of this amount may be in subsidized loans. | $10,500-No more than $4,500 of this amount may be in subsidized loans. |
| Third Year and Beyond Undergraduate Annual Loan Limit | $7,500 per year-No more than $5,500 of this amount may be in subsidized loans. | $12,500-No more than $5,500 of this amount may be in subsidized loans. |
| Graduate or Professional Student Annual Loan Limit | Not Applicable (all graduate and professional degree students are considered independent). | $20,500 (unsubsidized only). |
| Subsidized and Unsubsidized Aggregate Loan Limit | $31,000-No more than $23,000 of this amount may be in subsidized loans. | $57,500 for undergraduates-No more than $23,000 of this amount may be in subsidized loans.$138,500 for graduate or professional students-No more than $65,500 of this amount may be in subsidized loans. The graduate aggregate limit includes all federal loans received for undergraduate study. |
Notes
- The graduate aggregate limit includes all federal loans received for undergraduate study.
- The aggregate loan limits include any Subsidized Federal Stafford Loans or Unsubsidized Federal Stafford Loans you may have previously received under the Federal Family Education Loan (FFEL) Program. As a result of legislation that took effect July 1, 2010, no further loans are being made under the FFEL Program.
- Effective for periods of enrollment beginning on or after July 1, 2012, graduate and professional students are no longer eligible to receive Direct Subsidized Loans. The $65,500 subsidized aggregate loan limit for graduate or professional students includes subsidized loans that a graduate or professional student may have received for periods of enrollment that began before July 1, 2012, or for prior undergraduate study.
If the total loan amount you receive over the course of your education reaches the aggregate loan limit, you are not eligible to receive additional loans. However, if you repay some of your loans to bring your outstanding loan debt below the aggregate loan limit, you could then borrow again, up to the amount of your remaining eligibility under the aggregate loan limit.
Graduate and professional students enrolled in certain health profession programs may receive additional Direct Unsubsidized Loan amounts each academic year beyond those shown above. For these students, there is also a higher aggregate limit on Direct Unsubsidized Loans. If you are enrolled in a health profession program, talk to the financial aid office at your school for information about annual and aggregate limits.
Who is Eligible
To receive either type of loan, you must be enrolled at least half-time at a school that participates in the Direct Loan Program. Generally, you must also be enrolled in a program that leads to a degree or certificate awarded by the school. Direct Subsidized Loans are available only to undergraduate students who have financial need. Direct Unsubsidized Loans are available to both undergraduates and graduate or professional degree students. You are not required to show financial need to receive a Direct Unsubsidized Loan.
How to Apply
To apply for a Direct Loan, you must first complete and submit the Free Application for Federal Student Aid (FAFSA®) form. Your school will use the information from your FAFSA form to determine how much student aid you are eligible to receive. Direct Loans are generally included as part of your financial aid package.