Direct Unsubsidized Student Loans

Overview

Unsubsidized loans are a type of Direct Student Loan available to qualifying students. "Unsubsidized" means that the student borrower is responsible for the interest charged on the loan during the in-school and grace periods. A borrower may choose to pay the interest as it is charged each month or allow it to be added to the outstanding principal. Because interest is charged monthly and added to the principal, the added interest will compound over time. We strongly encourage recipients of unsubsidized loans to contact their Direct Loan servicer to set up interest payments. Making these smaller interest payments will help lower the total cost of the loan.

Borrowing Process for Unsubsidized Loans

Unlike Subsidized Direct Student Loans , unsubsidized loans do not require a borrower to have financial need in order to qualify. However, the student must still file the FAFSA in order to apply. The financial aid office will determine eligibility and the amount a student is able to borrow. Whether you receive an unsubsidized loan, a subsidized loan or a combination of the two will be indicated on the financial aid award letter the student receives from the school. A student may not borrower more than the maximum loan amount for the year in school for which the student is enrolled or the cost of attendance minus other financial aid including other students loans.

Unsubsidized Loan Limits

The amount a student may borrow is determined by level of study as follows:

  • $5,500 if a first-year student enrolled in a program of study that is at least a full academic year (if a portion of the loan qualifies to be subsidized, the subsidized portion can't exceed $3,500).
  • $6,500 if the student has completed the first year of study and the remainder of the program is at least a full academic year (no more than $4,500 of this amount may be in subsidized loans).
  • $7,500 if the student has completed two years of study and the remainder of the program is at least a full academic year (no more than $5,500 of this amount may be in subsidized loans).

If the student is an independent undergraduate student or a dependent student whose parents have applied for but were unable to get a Direct PLUS Loan for Parents, the student may borrow up to:

  • $9,500 if a first-year student enrolled in a program of study that is at least a full academic year (no more than $3,500 of this amount may be in subsidized loans).
  • $10,500 if the student has completed your first year of study and the remainder of the program is at least a full academic year (no more than $4,500 of this amount may be in subsidized loans).
  • $12,500 if the student has completed two years of study and the remainder of the program is at least a full academic year (no more than $5,500 of this amount may be in subsidized loans). This amount remains unchanged for both academic years.

Unsubsidized Loan Interest Rates

All Direct Subsidized and Unsubsidized Loans disbursed between July 1, 2014 and June 30, 2015 carry a fixed interest rate of 4.66% for undergraduates. Graduate or professional students receiving a Direct Unsubsidized Loan disbursed between July 1, 2014 and June 30, 2015 will have a fixed interest rate of 6.21%.

Unsubsidized Loan Fees

Direct Subsidized and Unsubsidized Student Loans originated on or after December 1, 2013 and before October 1, 2014 have a 1.072% origination fee. Loans disbursed on or after October 1, 2014 and before October 1, 2015 will have a 1.073% origination fee. The fee is deducted from the amount borrowed. What this means is that the amount the school receives (the "net proceed of the loan") will be 1.072% less than the total amount of the loan. The student is still responsible for repaying the entire amount borrowed.

Unsubsidized Loan Repayment Plans

No payment of principal or interest is required until six months after the student graduates, leaves school or ceases to be enrolled at least half-time. However, remember that interest will accrue during this period unless the student elects to pay it.

There are a number of different repayment plans available. You can find out more information about each at our Federal Student Loan Repayment Plans page. You will be given the option to select a plan at repayment. If you do not choose a plan, you will be placed in the Standard Repayment Plan and will make fixed monthly payment of at least $50 over 10 years.

Remember, borrow only what you need. Exhaust all federal student loan options before using private student loans. Be sure to compare private student loans to make sure you get the loan that’s right for you.