What is a Direct Unsubsidized Loan?

If you’re looking for information on Direct Unsubsidized Loans , you’ve come to the right place. This blog post will explain everything you need to know about these types of loans.

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What is a Direct Unsubsidized Loan?

A Direct Unsubsidized Loan is a loan for undergraduate and graduate students that is not based on financial need. If you are eligible, you may be able to receive a Direct Unsubsidized Loan regardless of your income. The amount you can borrow depends on your year in school, whether you’re a dependent or an independent student, other financial aid you’re receiving, and the cost of attendance at your school. You’re responsible for paying the interest on a Direct Unsubsidized Loan even while you’re in school and during grace periods and deferment or forbearance periods.

How to Apply for a Direct Unsubsidized Loan

If you’re looking for undergraduate student loans, your best bet is the Direct Unsubsidized Loan. This type of loan is available to both full-time and part-time students, and you don’t need to demonstrate financial need to qualify.

The annual loan limit for a Direct Unsubsidized Loan is $6,095 (for the 2018-19 school year), and the interest rate is a fixed 5.05%.

Here’s how to apply for a Direct Unsubsidized Loan:

1. Complete the Free Application for Federal Student Aid (FAFSA). You’ll need to include your school’s federal school code on your FAFSA form in order for your school to receive your FAFSA information.
2. Once your FAFSA has been processed, your school will send you a financial aid award letter that outlines the types and amounts of aid you’re eligible for.
3. If you’re eligible for a Direct Unsubsidized Loan, you’ll need to complete a Master Promissory Note (MPN). This is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to your lender. You can complete an MPN online at StudentLoans.gov.
4. Once your MPN has been processed, your school will notify you about how much money you can borrow and when that money will be disbursed (sent) to your school account.

Eligibility for a Direct Unsubsidized Loan

To be eligible for a Direct Unsubsidized Loan, you must first file a Free Application for Federal Student Aid (FAFSA®) form. If you’re a current student or a parent of a dependent student, the FAFSA form is available on fafsa.gov. If you’re a graduate or professional student, you may get a Direct Unsubsidized Loan if you complete the FAFSA form or the Grad PLUS Loan Application found at studentaid.gov/gradplus. You must also:
-Be enrolled at least half-time in a degree or certificate program at an eligible school
-Not have exceeded your federal student loan borrowing limits
-Not have defaulted on any previous federal student loans

Direct Unsubsidized Loan Interest Rates

The interest rate for Direct Unsubsidized Loans first disbursed on or after July 1, 2020 and before July 1, 2021 is 2.75%. The interest rate is fixed for the life of the loan.

Interest rates for Direct Unsubsidized Loans first disbursed prior to July 1, 2020, are as follows:
-Loans first disbursed between July 1, 2019 and June 30, 2020 have an interest rate of 4.53%.
-Loans first disbursed between July 1, 2018 and June 30, 2019 have an interest rate of 6.08%.
-Loans first disbursed between July 1, 2017 and June 30, 2018 have an interest rate of 6.31%.
-Loans first disbursed between July 1, 2016 and June 30, 2017 have an interest rate of 3.76%.
-Loans first disbursed between July 1, 2015 and June 30, 2016 have an interest rate of 4.29%.

All Direct Subsidized Loans and Direct Unsubsidized Loans have a 1.059% origination fee for loans first disbursed on or after October 1, 2019 and before October 1, 2020.

Direct Unsubsidized Loan Fees

All federal student loans have fees that are a percentage of the overall loan amount. These fees are deducted from each loan disbursement, so the money you receive will be less than the amount you actually borrow.

The fee for a Direct Unsubsidized Loan is 1.062% for loans first disbursed on or after October 1, 2020, and before October 1, 2021. For example, if you take out a $5,000 loan, the fee will be $53.10, which will be deducted from your loan disbursement.

Repayment of a Direct Unsubsidized Loan

Assuming you don’t have a grace period, you will begin repaying your Direct Unsubsidized Loan six months after you graduate, withdraw from school, or drop below half-time enrollment. Your loan servicer will contact you before your first payment is due to remind you of your repayment options and to provide information on managing your student loan debt. You can find contact information for your loan servicer at www.nslds.ed.gov.

If you have multiple federal student loans, you can consolidate them into a single Direct Consolidation Loan. This could make payments more manageable and allow you to repay your loans over a longer period of time.