Federal Direct Unsubsidized Stafford Loan Program

The Federal Direct Unsubsidized Stafford Loan Program is available to undergraduate students enrolled in a degree granting program at least half-time. Students are eligible for this loan providing the Cost of Attendance (COA) is greater than the amount of financial aid received and they have not reached the established annual borrowing limits. The U.S. Department of Education is the lender for the Federal Direct Unsubsidized Stafford Loan and the student will repay the U. S. Department of Education directly for this loan. For the 2012-13 academic year, the fixed interest rate is 6.8%. Unlike the Federal Direct Subsidized Stafford Loan, interest accrues on the Federal Direct Unsubsidized Stafford Loan from the time the loan is disbursed. Students have the option of paying the interest while enrolled, or can allow the interest to accrue. There is a 1% origination fee for this loan which will be deducted from the proceeds of the loan.

Federal Direct Unsubsidized Stafford Loan Borrowing Limits are dependent on a number of factors, including eligibility for Federal Direct Subsidized Stafford Loans, student dependency status, and a parent’s ability to obtain a PLUS Loan (Parent Loan for Undergraduate Students – see article on PLUS Loans for more information). The chart below contains a summary of Federal Direct Subsidized and Unsubsidized Stafford Loan Program borrowing limits for both dependent and independent students. In addition, the chart at the Federal Student Aid site has more detailed information and is very helpful in explaining loan limits for these programs.

Federal Direct Subsidized and Unsubsidized Stafford Annual Loan Borrowing Limits

Year in School Dependent Students * Independent Students **
Year 1

$5,500 total with no more than $3,500 of this amount in subsidized Stafford loans.

$9,500 total with no more than $3,500 of this amount in subsidized loans.

Year 2

$6,500 total with no more than $4,500 of this amount in subsidized loans.

$10,500 total with no more than $4,500 of this amount in subsidized loans.

Year 3 and Beyond

$7,500 total with no more than $5,500 of this amount in subsidized loans.

$12,500 total with no more than $5,500 of this amount in subsidized loans.

Maximum Debt

$31,000 maximum loan amount with no more than $23,000 of this amount in subsidized loans.

$57,500 total with no more than $23,000 of this amount in subsidized loans.

*These amounts are for the dependent undergraduate student only, except for those students whose parents are unable to obtain a Federal PLUS Loan. See Independent Student column for those limits.  ** These amounts are for independent undergraduate students as well as dependent students whose parents are unable to obtain a Federal PLUS Loan.

NOTE: Interest does NOT accrue on the Federal Direct Subsidized Stafford Loan until a student enters the repayment period (six months after graduating or withdrawing or dropping to less than half-time status). However, interest WILL accrue on the Federal Direct Unsubsidized Stafford Loan from the time of disbursement. Accrued interest is added to the principal loan amount which increases the total cost of the loan.For repayment calculators, check out the loan calculatorsoffered by the U.S. Department of Education and use them as a guide when borrowing loans.For a step by step guide through the financial aid process, please check out Financial Aid Sense for a practical guide about financial aid and college financing.

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