Direct Loans

Direct Loans are low-interest education loans available through the Federal Direct Loan Program. To apply for a Direct Loan, you must complete the Free Application for Student Aid (FAFSA).

When you receive your first Direct Loan, you must sign a Master Promissory Note (MPN) in addition to completing Entrance Counseling. By signing the MPN you promise to repay what you borrow plus any interest that adds up. The MPN also explains the terms and conditions of the loan. Usually the same Direct MPN can be used for Federal Direct Loans you take over several years. Other types of loans have their own MPNs.

For more information on the Direct MPN, you can visit here.

You make your repayments to your loan servicer, who will provide information about the repayment process and notify you when the first payment is due. To find out who your loan servicer is, go to the National Student Loan Data System at and click on Loan Servicer. You'll need the PIN you received when you filed your FAFSA online. You can also call the Federal Student Aid Information Center at 800-433-3243.


Direct Loans may be either subsidized or unsubsidized.

To be awarded a Direct Subsidized Loan, the information you provide on the FAFSA must show you have financial need. In that case, the government pays the interest on the amount you borrow while you are enrolled at least half-time. This subsidy means that borrowing costs you less than it would otherwise. Direct Loans are only available to undergraduate students.

You can be awarded a Direct Unsubsidized Direct Loan without demonstrating financial need. What's different is that you are responsible for all of the interest that accrues while you are enrolled, and during any deferments for which you qualify. You can choose to pay the interest as it is due or you can capitalize the interest. This means you add the amount to your loan principal. Capitalizing the interest means borrowing costs you more because the principal on which interest accrues is larger.


The amount you can borrow with a Direct Loan changes based on several factors. You can find the most recent annual and aggregate loan limits here.

Click on Annual and Aggregate Loan Limits in the right-hand NAV. Annual limits are the amounts you can borrow in Direct Loans each year and aggregate limits are the total amounts you can borrow before you graduate.

Independent undergraduates who are not dependents of their parents and those dependent students whose parents are unable to obtain PLUS Loans are allowed to borrow more on an annual and aggregate basis than dependent undergraduates. Graduate students are allowed higher annual and aggregate balances than undergraduates.


If you receive a federal student loan, you will be required to repay that loan with interest. It is important that you understand how interest is calculated and the fees associated with your loan. The interest rates for federal student loans are determined by federal law. You can find current interest rates for subsidized and unsubsidized loans here.

If you have a Direct or PLUS Loan issued prior to July 1, 2006, the interest rate will continue to be variable. The rate will be adjusted annually effective July 1, based on prevailing interest rates on short-term government securities.

In addition to interest, you pay a loan fee calculated as a percentage of the amount you borrow. It is deducted proportionally each time a loan amount is paid to your school.


When you graduate or are no longer enrolled at least half-time, you must complete federally mandated Direct exit counseling through
Remember to borrow only what you need, because when you borrow you are promising to pay it ALL back. Meet with your Student Finance representative so that you understand exactly how much you are borrowing, what the money you're borrowing will cover, how much you really need to borrow, and what to do if you don't need all your funding. You have options on how to handle federal loan refunds.