Direct Subsidized Loans

Direct Subsidized Loans are for undergraduate students with financial need. Baylor will review the results of your Free Application for Federal Student Aid (FAFSA) and determine the maximum amount you can borrow.

You are not charged interest while you’re in school at least half-time and during deferment periods.

You will be charged interest during the six-month grace period for subsidized loans for which the first disbursement is made on or after July 1, 2012, and before July 1, 2014.

For loans disbursed prior to this timeframe and after this timeframe, interest will not accrue during the grace period.

Annual and Aggregate Loan Limits

The annual loan limit amounts are the maximum yearly amounts you can borrow in both Subsidized and Unsubsidized Direct Loans. You can have one type of loan or a combination of both. Because you can't borrow more than your cost of attendance minus any other financial aid you'll get, you may receive less than the annual maximum amounts. Also, the annual loan limits assume that your program of study is at least a full academic year.

Remember, only borrow what you need; you can borrow less than you are offered each year. If you have advanced a grade level by the end of the spring (freshman to sophomore or sophomore to junior), you may be eligible to borrow an additional $1000 for the summer.

If you borrow the maximum allowed each year for four years, but then find you need a fifth year of study you will reach the aggregate limit and will be limited in the amount you can borrow during your fifth year.

With careful planning allowing you to graduate on time or early, you will not reach the aggregate limit. Click here to view a sample loan disclosure statement. You will receive a statement specific to your loan before your loan is disbursed.

Click here to view maximum annual and aggregate (total) loan limits for Direct Subsidized and Unsubsidized Loans.

Loan Fees and Interest Rates

The total origination fee for Subsidized and Unsubsidized Loans is 1.069% of the amount borrowed for loans disbursed after October 1, 2016. The origination fee will change effective October 1, 2017.

The interest rate for undergraduates on Direct Subsidized and Unsubsidized Loans borrowed on or after July 1, 2016, and before July 1, 2017, is 3.76%.

The interest rate for graduate students on Direct Unsubsidized Loans borrowed on or after July 1, 2016 and before July 1, 2017 is 5.31%. (Graduate students are not eligible for Direct Subsidized Loans.)

New rates will be established each June for the upcoming year. The interest rate for a loan will apply for the life of the loan (fixed-rate). As a result, it is likely you will have a set of fixed-rate loans, each with a different interest rate.

Right to Decline Loans

You have the right to decline any financial aid that you are offered. You have a number of rights and responsibilities pertaining to borrowing student loans. Click here for a list of important rights and responsibilites of which you should be aware.

Master Promissory Note(MPN)

Sign a Direct Loan master promissory note the first time you borrow. Go to and log in with your FSA ID to sign your MPN.

Entrance Counseling

Complete Direct Loan entrance counseling one time after you have been offered a Direct Subsidized or Unsubsidized Loan and accepted the offer. Go to and sign in with your FSA ID to complete entrance counseling.

Exit Counseling

Exit counseling is required when you cease to be enrolled at least half-time. If you drop below half-time hours, withdraw, graduate, or stop attending, you are required to complete exit counseling by logging in with your FSA ID at


When you receive your first Direct Loan, you will be contacted by the servicer for that loan. Your loan servicer will provide regular updates on the status of your Direct Loan, and any additional Direct Loans that you receive. If you’re not sure who your loan servicer is, look it up on

After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you begin repayment. You do not have to make payments during the grace period (unless you choose to) but the interest will be added (capitalized) to the principal amount of your loan when the grace period ends. During this period, you'll receive repayment information from your loan servicer, and you'll be notified of your first payment due date. Payments are usually due monthly.