Direct Student Loans

Direct Subsidized/Unsubsidized Loans

Students, who complete the Free Application for Federal Student Aid (FAFSA)and are eligible for federal aid programs, may receive a Direct Loan as part of the Aid Award Offer from UW Colleges. A Federal Direct Student Loan award may be a Direct Subsidized Loan, Direct Unsubsidized Loan, or a combination of both. All Direct Subsidized and Direct Unsubsidized Loans must be repaid by the student borrower.

To receive Direct Subsidized and/or Unsubsidized Loan funds, a student must:

  1. actively accept the loan award in PRISM after receiving a Financial Aid Award Offer notice from the UW Colleges Student Financial Aid Office,
  2. complete Direct Loan Entrance Counseling, and
  3. complete a Direct Loan Master Promissory Note.

Direct Subsidized and Unsubsidized Loans must be reflected as accepted in PRISM before the student ceases enrollment or by the end of the associated loan period, whichever is earlier.  For a student who completes the term, this means that a loan awarded for:

  • fall only must be accepted by the end of the fall term
    • fall 2017 only must be accepted by the end of the fall 2017 term – Noon on December 22, 2017
    • fall 2018 only must be accepted by the end of the fall 2018 term – Noon on December 21, 2018
  • spring only or for the academic year (both fall and spring semesters) must be accepted by the end of the spring term
    • spring 2018 only or for the academic year (both fall 2017 and spring 2018) must be accepted by the end of the spring 2018 term – Noon on May 21, 2018
    • spring 2019 only or for the academic year (both fall 2018 and spring 2019) must be accepted by the end of the spring 2019 term – Noon on May 20, 2019
  • attempts/requests to accept a loan after the end of the respective loan period cannot be processed

Direct Subsidized Loan

Students must have financial need to qualify for this type of loan. The federal government pays* the interest on a Direct Subsidized Loan while a student is enrolled in school at least half time (6 or more credits) and during authorized periods of deferment.

Repayment begins six months after the student ceases half-time enrollment (at least 6 credits) or graduates. The origination fee of the loan amount is:

  • 1.069% on or after Oct. 1, 2016 and before Oct. 1, 2017
  • 1.066% on or after Oct. 1, 2017 and before Oct. 1, 2018

and is automatically deducted at time of disbursement. The Direct Subsidized interest rate for loans disbursed July 1, 2017-June 30, 2018 is 4.45%.

Loan Repayment Plans

Subsidized Loan 150% Limit:
Due to enactment of a new law beginning July 1, 2013, students who are first-time borrowers as of July 1, 2013 are limited to receive Federal Subsidized Loan monies for only up to 150% of the published length of their current academic program. A first-time borrower is defined as a student that has no outstanding Federal Direct or Federal FFELP Loans on July 1, 2013.

Students that reach 150% of the length of their program are not eligible for further Direct Subsidized Loans. Students may still be eligible for Direct Unsubsidized Loans. *Students, who have not completed their program when the 150% limit is reached and continue to be enrolled in the program or another program of equal or lesser length, will lose the interest subsidy on Direct Subsidized Loans that were previously borrowed.

For additional information from the US Department of Education on this issue, please review: Time Limitation on Direct Subsidized Loan Eligibility for First-Time Borrowers on or after July 1, 2013.

Direct Unsubsidized Loan

Financial need is not required to receive this loan. A student will be charged interest on a Direct Unsubsidized Loan from the time it is disbursed until the loan is paid in full. Students may pay the interest while in school or allow the interest to be capitalized (added to the loan principal). Capitalizing the interest will increase the amount repaid over the life of the loan. Students are encouraged to make quarterly interest payments, if possible.

Repayment begins six months after the student ceases half-time enrollment (6 or more credits) or graduates. The origination fee of the loan amount is:

  • 1.069% on or after Oct. 1, 2016 and before Oct. 1, 2017
  • 1.066% on or after Oct. 1, 2017 and before Oct. 1, 2018

and is automatically deducted at time of disbursement. Direct Unsubsidized interest rate for loans disbursed July 1, 2017-June 30, 2018 is 4.45%.

Loan Repayment Plans

Annual and Aggregate Direct Loan Limits

There are limits on the amount of Direct Subsidized and Direct Unsubsidized Loan funds a student may be eligible to receive each academic year (annual loan limit) and the total amount a student may borrow for undergraduate study (aggregate loan limit).

The actual Direct Loan amount a student may be eligible to receive each academic year may be less than the annual loan limit depending on factors which include the Expected Family Contribution as calculated through the FAFSA, the estimated Cost of Attendance, and all of the other financial aid awards in a student's aid package .

Annual and aggregate loan limits are tied to a student's year in school and whether the student is a dependent or independent aid applicant. The chart below shows the annual and aggregate limits for Direct Subsidized and Unsubsidized Loans for undergraduate students. 

  Dependent* Aid Applicant Independent Aid Applicant

Freshman
Annual Limit

$5,500—No more than $3,500 of this amount may be in Direct Subsidized Loan funds $9,500—No more than $3,500 of this amount may be in Direct Subsidized Loan funds
Sophomore
Annual Limit
$6,500—No more than $4,500 of this amount may be in Direct Subsidized Loan funds $10,500—No more than $4,500 of this amount may be in Direct Subsidized Loan funds

BAAS (Junior/Senior)
Annual Limit

$7,500—No more than $5,500 of this amount may be in Direct Subsidized Loan funds $12,500—No more than $5,500 of this amount may be in Direct Subsidized Loan funds
Subsidized and Unsubsidized Aggregate Loan Limit Undergrad** $31,000—No more than $23,000 of this amount may be in Direct Subsidized Loan funds $57,500—No more than $23,000 of this amount may be in Direct Subsidized Loan funds

*A dependent aid applicant whose parents are ineligible for a Direct PLUS Loan may be able to receive additional Direct Unsubsidized Loan funds.
**The Aggregate Loan Limit for graduate students is higher than what is listed for undergraduates. However since UW Colleges does not offer any graduate programs, the graduate student aggregate limit is not provided.