Federal Direct Student Loans are low-interest loans for eligible students to help cover the cost of attendance. Eligible students borrow directly from the U.S. Department of Education and are assigned to a loan servicer. Undergraduate students must be enrolled for at least six credits (half-time), while graduate students must be enrolled for at least five credits to be eligible for Direct Student Loans.
Available to undergraduate students only who are enrolled in at least six credits (half-time).
Must have financial need, the difference between the cost of attendance (COA) at a school and your Expected Family Contribution (EFC). While COA varies from school to school, your EFC does not change based on the school you attend.
Interest does not accrue while in school at least half-time (six credits or more) and/or during a period of deferment, a temporary postponement of payment on a loan that is allowed under certain conditions and during which interest generally does not accrue on Subsidized Stafford loans.
Available to undergraduate and graduate students who are enrolled in at least half-time status. Half-time status is 6 credits for undergraduate students and 5 credits for graduate students.
Interest accrues (accumulates) on an unsubsidized loan from the time it’s first paid out.
Interest payments are recommended while you are in school to reduce your overall loan indebtedness.
During a period of grace, deferment/forbearance, your monthly loan payments are temporarily suspended or reduced, but interest will still accrue.
Interest will accrue and be capitalized if you choose not to pay the interest.
Learn more about Direct Unsubsidized Stafford Loans on the Federal Student Aid website.
The interest rates on federal direct student loans are determined by the federal government for each academic year and are fixed (meaning they do not change) for the life of the loan.
The origination loan fee is a small percentage of the loan that kept by the federal government for processing the loan. The origination loan fee on Subsidized and Unsubsdized loans is 1.057% for the 2024-2025 academic year.
You can view the Federal Student Aid website to see current and past origination loan fees.
Is this your first time borrowing Federal Direct Loans? If so, you must complete these two additional steps through the Federal Student Aid website to have the loan pay to your account:
Entrance Counseling: Entrance Counseling counsels first-time Federal Direct Loan borrowers on the terms and conditions of the loan and of the borrower’s responsibilities.
Master Promissory Note (MPN): The MPN 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. The MPN gives detailed descriptions on the terms and conditions of your loan(s). It includes information on how interest is calculated as well as deferment and repayments options available to you.
For all Federal Loans (including federal Direct Subsidized, Unsubsidized, federal parent PLUS Loan and federal graduate PLUS Loans) all loan steps (including accepting the loan, completing promissory notes and entrance counseling) must be completed prior to the last day of enrollment, while also allowing our office adequate time for processing any such loan. Any loan steps completed late may result in loans that are unable to be processed through the federal government.
How Much Can I Borrow?
Annual Limit
Year in School
Dependent on FAFSA
Independent of FAFSA*
First Year (0-29 credits)
$5,500 (no more than $3,500 can be Subsidized)
$9,500 (no more than $3,500 can be Subsidized)
Second Year (30-59 credits)
$6,500 (no more than $4,500 can be Subsidized)
$10,500 (no more than $4,500 can be Subsidized)
Third Year (60-89 credits)
$7,500 (no more than $5,500 can be Subsidized)
$12,500 (no more than $5,500 can be Subsidized)
Fourth Year and above (90+ credits)
$7,500 (no more than $5,500 can be Subsidized)
$12,500 (no more than $5,500 can be Subsidized)
*Includes dependent students whose parents are unable to obtain a PLUS Loan.
Overall Loan limit towards your Undergraduate Degree
Dependent on FAFSA
Independent of FAFSA*
$31,000 total ( Subsidized loans are only awarded up to $23,000)
$57,500 total (Subsidized loans are only awarded up to $23,000)
*Includes dependent students whose parents are unable to obtain a PLUS Loan.
Annual Maximum
Overall Maximum
$20,500 in Unsubsidized Loans
$138,500 total of Subsidized/ Unsubsidized loans including any borrowed during undergrad.
Parent PLUS Loan
A PLUS loan is meant to assist families in covering costs beyond any student financial aid. PLUS Loans are borrowed through the Department of Education and assigned to a loan servicer.
Parents of dependent, undergraduate students may apply for the Parent PLUS.
The interest rates on federal Parent PLUS loans are determined by the federal government for each academic year and are fixed (meaning they do not change) for the life of the loan.
Not pursue the PLUS Loan: The student may use additional Direct Unsubsidized Loan. Additional Unsubsidized Stafford loan funding is available up to $4,000/academic year for first and second year students (59 or less credit hours earned); and up to $5,000/academic year for third and fourth year students (60 or more credit hours earned).
Graduate PLUS Loan
A Graduate PLUS loan is only available for graduate students working toward their master’s or other professional degree. Unsubsidized Direct Loan should be used first.
The interest rates on federal Parent PLUS loans are determined by the federal government for each academic year and are fixed (meaning they do not change) for the life of the loan.
Important: the Federal Perkins Loan Program has been cancelled by the federal government as of July 1, 2018.
Perkins is a low-interest federal student loan program. Funds are limited and not guaranteed from year to year. The loan is awarded through Purchase and the loan servicer is the Student Loan Servicing Center (SLSC).
Most experts believe that federal student loans are better than private education loan in terms of repayment options and interest rates. Purchase College’s policy is that it will not certify a private loan that is greater than a student’s Cost of Attendance. Student Financial Services at Purchase College does not steer or influence students in regards to private loan lenders and cannot give out suggested lenders.
Private loans are education credit based loans that are offered by several financial lending institutions. Not everyone will credit qualify for these loans. Private loans are designed to finance your remaining cost of attendance after all other sources of federal aid are exhausted.
Purchase College strongly encourages you to complete your Free Application for Federal Student Aid (FAFSA) in order to receive the Federal Direct Loans. Qualified Federal Direct borrowers can receive Federal Direct loans regardless of need.
Shortly after receipt of your FAFSA form, you will receive an email instructing you to view your award letter which itemizes your financial aid eligibility. If you still feel that it is necessary to borrow a private loan once your financial aid package is awarded to you, research any financial lending institution of your choice to cover your remaining educational expenses.
Also, when deciding upon how much to borrow, practice smart borrowing techniques and only borrow those funds that you need. A refund from your private loan may be nice up front, but could be very costly down the road!
Lastly, if possible, have a cosigner (parent, grandparent, aunt, uncle, etc.) apply for the loan with you. Often lenders require the use of cosigners, and it can be very cost effective for the primary borrower to use a cosigner as interest rates will most likely be drastically reduced.
In accordance with the Truth in Lending Act (TILA), financial lending institutions are required to provide students with three loan disclosures. Each disclosure informs the borrower of specific information regarding the loan.
Application Disclosure: the Application Disclosure is generally presented to the borrower along with the loan application. If the disclosure is not provided with the initial loan application, the lender will be required to mail an Application Disclosure to the borrower within three days after an application is received.
The Application Disclosure contains pertinent information about:
the range of rates
fees
other terms that apply
total cost of the loan
federal student loan options
Please be aware the Application Disclosure must be accepted and signed by the borrower and cosigner in order to proceed through the application process.
Approval Disclosure: the Approval Disclosure is provided to the borrower electronically or by mail when the lender has conditionally approved or approved the borrower for a loan.
The borrower and cosigner will receive the Approval Disclosure as part of the application process before the promissory note is signed. The Approval Disclosure must be accepted by both the borrower and cosigner within 30 calendar days of the credit offer. The Approval Disclosure must state the acceptance date deadline and the manner in which the lender requires the borrower to accept the terms of the loan. If any permissible changes (i.e. changes made to accommodate a borrower request) are made to the loan, a new disclosure and 30 day acceptance period is required to accept new terms.
Remember that the Approval Disclosure must be accepted and signed by the borrower and cosigner (if applicable) prior to continuation of the application process.
Final Disclosure: the Final Disclosure is presented to the borrower after the loan terms have been accepted. A three day recession period occurs after the Final Disclosure is presented to the borrower.
The Final Disclosure will note the borrowers’ right to cancel the loan, state the deadline for cancellation, and the methods in which a lender accepts a cancellation request.
Lastly, the Final Disclosure provides the borrower with the final information on the cost of their loan.
National Student Loan Data System (NSLDS)
Disclosure Requirement: Information provided to borrowers
HEOA Sec. 489 amended HEA Sec. 485B(d)(4) (20 U.S.C. 1092b)
Students and parents of students are advised that if they enter into a Title IV, HEA loan, the loan data will be submitted to the National Student Loan Data System (NSLDS), and will be accessible by guaranty agencies, lenders, and institutions determined to be authorized users of the data system. 13
Additional information regarding the National Student Loan Data System may be accessed on their webpage.
If you are unable to locate the information you need from the links set forth above, Purchase College Financial Aid Counselors may be contacted directly at:
