What is a Direct Unsubsidized Loan?

A Direct Unsubsidized Loan is a federal student loan that is not based on financial need. The U.S. Department of Education makes Direct Unsubsidized Loans to eligible undergraduate and graduate students.

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What is a Direct Unsubsidized Loan?

A Direct Unsubsidized Loan is a federal student loan that is not based on financial need. You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods. If you choose not to pay the interest while you are in school and during grace periods or deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (added to the principal amount of your loan). This will increase the total amount you have to repay.

How to Apply for a Direct Unsubsidized Loan

The first step in applying for a Direct Unsubsidized Loan is to complete and submit the Free Application for Federal Student Aid (FAFSA®) form.

You will need to provide your social security number, as well as the social security numbers of your parents if you are a dependent student. You will also need your most recent federal tax return, W-2 forms, and other records of money earned. You can complete the FAFSA form online at www.fafsa.ed.gov or request a paper FAFSA form by calling 1-800-4-FEDAID (1-800-433-3243).

If you are selected for verification by your school, you will be required to submit documentation to verify the information you reported on your FAFSA form. This may include federal tax return transcripts, proof of income, and proof of identity. A list of required documents will be sent to you by your school’s financial aid office if you are selected for verification.

Once your FAFSA form is complete and submitted, your school’s financial aid office will send you a financial aid award letter that lists the types and amount of aid you are eligible to receive. If you are offered a Direct Unsubsidized Loan as part of your financial aid package, you will be asked to accept or decline the loan in writing.

What is the Interest Rate for a Direct Unsubsidized Loan?

The interest rate for a Direct Unsubsidized Loan is a fixed rate that is set by the Department of Education each year. For loans first disbursed on or after July 1, 2019, and before July 1, 2020, the interest rate is 4.53%.

What are the Fees for a Direct Unsubsidized Loan?

There is a 1.059% origination fee for Direct Unsubsidized Loans. This fee is deducted from the loan before it is disbursed to you.

When is the First Payment Due for a Direct Unsubsidized Loan?

The first payment on a Direct Unsubsidized Loan is due six months after you graduate, leave school, or drop below half-time enrollment. If you received Direct Subsidized Loans for any period of time when you were not responsible for the interest, the grace period does not begin until you enter repayment. The six-month grace period gives you time to select a repayment plan and begin making payments.

How to Repay a Direct Unsubsidized Loan

Direct Unsubsidized Loans are low-interest loans for eligible students to help cover the cost of college or career school. The U.S. Department of Education is the lender for Direct Unsubsidized Loans.

Eligible students can borrow up to the cost of attendance (less any other financial aid they receive) each academic year.

There are no limits on the amount of Direct Unsubsidized Loans that students can receive, but there is a limit on the amount that can be subsidized by the government. Students are responsible for all interest that accrues on their loans from the time the loan is disbursed until it is paid in full.

repayment begin six months after you graduate, leave school, or drop below half-time enrollment; however, you can choose to pay the interest while you are in school and during your grace period. If you choose not to pay the interest while you are in school and during your grace period, your interest will be capitalized (added to your principal balance), and your monthly payments will be higher.