Federal Student Loans
There are two types of Federal Direct loans: subsidized and unsubsidized. Interest rates for Federal Direct loans vary based on type, dependent status, and grade level; however, they remain fixed for the life of the loan.
Federal Direct Subsidized Student Loans
Federal subsidized loans are awarded to students on the basis of financial need. The federal government pays the borrower’s accrued interest while the student is in school and up to 6 months after they stop attending, thereby “subsidizing” these loans.
Federal Direct Unsubsidized Loans
Federal unsubsidized loans are not need based; the borrower is responsible for accrued interest throughout the life of the loan. The borrower can choose to pay just the interest while in school or let the interest compound. The current interest rate is a fixed 6.8%.
Federal Loan Limits
The annual loan limits for undergraduates are as follows:
- $3,500 combined Federal subsidized and/or Federal unsubsidized plus $6,000 additional Federal unsubsidized for independent first-year undergraduates;
- $4,500 combined Federal subsidized/and or Federal unsubsidized plus $6,000 additional Federal unsubsidized for independent second-year undergraduates; and
- $5,500 combined Federal subsidized and/or Federal unsubsidized plus $7,000 additional Federal unsubsidized for independent third-, fourth-, or fifth year undergraduates.
The annual loan limit for graduate and professional loans is as follows:
- The annual loan limit for a graduate or professional student is $20,500 per academic year.
- Effective 7/1/12, all graduate federal student loans are unsubsidized.
The Lifetime maximum limit for an undergraduate student is $57,500 with the maximum Federal subsidized amount of $23,000.
The Lifetime maximum limit for a graduate student is $138,500 with the maximum Federal subsidized amount of $65,500. The $138,500 includes all undergraduates Federal subsidized and Federal unsubsidized loans.