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 are not the official loan names.)
Direct Subsidized Loans
Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need (as determined by the FAFSA) to help cover the costs of higher education. This loan is authorized by Title IV, Part D of the HEA and is one component of the Direct Loan Program. The Department of Education subsidizes the interest for this loan while the borrower is in an in-school, grace, or deferment period. Baylor will review the results of your Free Application for Federal Student Aid (FAFSA) and determine the maximum amount you can borrow. See annual and aggregate loan limits below.
Direct Unsubsidized Loans
Direct Unsubsidized Loans are awarded to eligible undergraduate, graduate, and professional students, but eligibility is not based on financial need. This loan is authorized by Title IV, Part D of the HEA and is one component of the Direct Loan Program. The Federal Direct Unsubsidized Stafford/Ford Loan Program provides loans to undergraduate, graduate, and professional students attending schools that participate in the Direct Loan Program. The borrower is responsible for the interest that accrues during any period.
If you are a dependent student whose parents are not eligible for a Direct PLUS Loan, you may be able to receive additional Unsubsidized funding. Please see “Next Steps for Denied Parent PLUS Borrowers” below.
Direct Loan Borrowing Amounts, Annual, and Aggregate Loan Limits
There are limits to the amount of 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 amounts vary depending on:
- Your grade level year of education.
- FAFSA Determined Information
- Your student status – dependent or independent.
- Your Estimated Family Contribution (EFC) to determine your level of need for Subsidized Loans
- Your Cost of Attendance, Estimated Financial Assistance (EFA), and remaining student budget.
- Annual loan limits assume that your program of study is at least a full academic year.
- Annual limits associated with Direct Loans are based on the SAY or BBAY defined academic year the student is in. Learn more about SAY/BBAY and loan periods under “Alternative Loans” and “Loan Periods” below.
- If a student intends to attend for an entire academic year, they will be offered eligible loans with substantially equal disbursements for each term.
- If an undergraduate student is scheduled to graduate in December and will not attend for an entire aid year, their Direct Loans will be subject to proration.
With careful planning allowing you to graduate on time or early, you will not reach the aggregate limit. Click here and here to view sample loan disclosure statements. You will receive a statement specific to your loan before your loan is disbursed.
- Remember, only borrow what you need. You can borrow less than you are offered each year.
- If you advance a grade level by the end of spring (freshman to sophomore, sophomore to junior), you may be eligible to borrow an additional $1,000 for the summer.
- Be aware of aggregate limits when you borrow the max amount for four years. You will be limited in the amount you can borrow for the fifth year of study.
Annual and Aggregate Loan Limits
|
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
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. |
Aggregate Limit |
Subsidized and Unsubsidized Aggregate Loan Limit |
$31,000
No more than $23,000 of this amount may be in subsidized loans. |
$57,500
No more than $23,000 of this amount may be in subsidized loans. |
Graduate or Professional Student |
$20,500
(unsubsidized only) |
$138,500 |
MPH PROGRAM ONLY |
$33,000
(unsubsidized only) |
$224,000 |
- 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.
Direct Loan Fees and Interest Rates
Origination Fees
The total origination fee for Subsidized and Unsubsidized Loans is 1.057% of the amount borrowed for loans disbursed after October 1, 2020. The origination fee is subject to change annually at the end of September. Origination fees for the next academic year are released in June.
Interest Rates
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. See studentaid.gov for new rate information annually.
4.99%
Direct Subsidized and Unsubsidized Loans
|
6.54%
Direct Unsubsidized Loans
|
Additional Interest Rate Support
Direct Loan Master Promissory Note (MPN)
The Master Promissory Note (MPN) for Direct Subsidized Loans and Direct Unsubsidized Loans is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s).
You may receive more than one loan under an MPN over a period of up to 10 years to pay for your educational costs, as long as the school is authorized to use the MPN in this way and chooses to do so.
You must sign a Direct Loan Master Promissory Note. This will be the only promissory note you will have to sign as long as you continue to attend Baylor as an undergraduate student. You will need to complete a new MPN as a graduate student. Your FSA ID is required to eSign at studentaid.gov/mpn.
Right to Decline Direct Loans
- You have the right to decline any financial aid that you are offered.
- Before your loan money is disbursed, you may cancel all or part of your loan at any time.
- After your loan money is disbursed, you may return all or a portion of your loan proceeds that credited to your account, to your lender within 90 days of the notice that we send you.
- If you want to cancel or return loan proceeds, please submit a Contact Us form.
- You have a number of rights and responsibilities pertaining to borrowing student loans. Click here for a list of important rights and responsibilities of which you should be aware.
Direct Loan Entrance Counseling
Entrance counseling ensures you understand the terms and conditions of your loan and your rights and responsibilities. You will learn what a loan is, how interest works, your options for repayment, and how to avoid delinquency and default.
Complete Direct Loan entrance counseling after accepting a Direct Subsidized or Unsubsidized Loan offer. Go to studentaid.gov/entrance-counseling and sign in with your FSA ID to complete entrance counseling. Entrance Counseling will only need to be completed once, for first time borrowers of a loan type, before loan disbursement can take place.
Direct Loan Disbursement and Reporting
- Loan Disbursement
- Once all requirements are met, accepted Title IV loans will schedule to disburse, no earlier than ten days before the first day of class.
- In most cases, we will apply the loan money to your student account to pay tuition, fees, and any other authorized charges.
- If there is money left over, we will initiate a refund of the surplus.
- Reporting
- Title IV loan information will be submitted to NSLDS and accessible by authorized agencies, lenders, and institutions, for students, or parents of students, who enter into an agreement regarding Title IV loans [HEOA 489 amended HEA Sec. 485B] – Access Title IV loan information here: https://nsldsfap.ed.gov/nslds_SA/.
- After your loan is disbursed, you will be contacted by your loan servicer.
Direct Loan Exit Counseling
Exit counseling is required each time 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 studentaid.gov/exit-counseling. This applies for borrowers under the Federal Perkins Loan Program, William D. Ford Federal Direct Student Loan Program, and under the Federal Stafford Loan Program. The purpose of exit counseling is to ensure you understand your student loan obligations and are prepared for repayment.
If a student meets the criteria above, exit counseling is required each time there is more than a 30 day break in at least half-time enrollment, EXCEPT during non-compulsory terms.
Direct Loan Repayment
Understanding the details of repayment on your federal student loan is extremely important. Direct Subsidized and Unsubsidized loan programs generally observe the following provisions:
- A 6-month grace period is provided before payments are due.
- Interest accrues during your grace period (excluding Direct Subsidized Loans).
- Your loan servicer will provide you with a loan repayment schedule.
- There are multiple repayment options available to choose from.
- Your billing statement will explain how much to pay and when.
- You are required to repay all loans that you have borrowed. Under special circumstances, there are student loan forgiveness options.
Repayment Support Information