Federal Subsidized and Unsubsidized Direct Loans
Subsidized and unsubsidized loans are federal student loans for eligible students to help cover the cost of higher education.
Loans are sources of funding that allow you to spread the cost of education over time. They are available from various sources, including federal and state governments, and private lenders. Federal and State loans must be accepted prior to the end of the enrollment period to allow sufficient time for school certification and to meet half-time or more enrollment disbursement requirements.
Loans are first credited to your student account with any remaining money disbursed to you through direct deposit. Your loans may be canceled if you do not complete the required documents (i.e., master promissory note and entrance counseling).
When you take out a student loan, you must pay it back--even if you do not complete your education.
Here is a quick overview of the Direct Subsidized Loan:
- Direct subsidized loans are available to undergraduate students with financial need that are enrolled at least half-time.
- Financial need is calculated by taking the projected cost of education for the period for which you are applying for aid, and subtracting the student and/or parent contribution (EFC from your FAFSA).
- For a subsidized loan, the U.S. Department of Education pays the interest
- while you are in school at least half-time
- for the first six months after you leave school (referred to as your grace period), and
- during a period of deferment (a postponement of loan payments).
Note: If you receive a direct subsidized loan that is first disbursed between July 1, 2012, and July 1, 2014, you will be responsible for paying any interest that accrues during your grace period. If you choose not to pay the interest that accrues during your grace period, the interest will be added to your principal balance.
Here is a quick overview of the Direct Unsubsidized Loan:
- Direct unsubsidized loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need.
- Winona State University determines the amount you can borrow by considering the cost of attendance and other financial aid you receive.
- For an unsubsidized loan, you are responsible for paying the interest during all periods.
- If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, you interest will accrue and be capitalized (your interest will be added to the principal amount of your loan).
For a complete list of the terms and conditions governing the Federal Subsidized and Unsubsidized Direct Loans please refer to the Federal Direct Loans Master Promissory Note (MPN) (PDF).
How do I apply?
Before you apply for a student loan, you first need to complete the FAFSA Application.
Once your Financial Aid Application is complete, the Financial Aid Office will provide you with an Official Award Letter. Use the Official Award Letter, plus the tools on the Financial Aid website, to apply for your student loans.
New and returning students must accept the Federal Direct Loan on-line at the WSU Student e-Services registration site. For step by step instructions please click on Instructions on Applying for a Federal Direct Loan.
How much can I borrow?
There are limits on the maximum amount in subsidized and unsubsidized loans that you are eligible to receive each academic year (annual loan limit) and over your academic career (total loan limits). These limits depend on what year you are in school, and whether you are a dependent or independent student.
If you are a dependent student whose parents are ineligible for a Direct PLUS Loan, you may be able to receive additional loan funds.
The following chart provides maximum annual and total loan limits for subsidized and unsubsidized loans as of July 1, 2012.
|Dependent Students (except students whose parents are unable to obtain PLUS Loans)||Independent Students (and dependent student whose parents are unable to obtain PLUS Loans)|
|First Year||$5,500-No more than $3,500 of this amount may be in subsidized loans.||$9,500-No more than $3,500 of this amount may be in subsidized loans.|
|Second Year||$6,500-No more than $4,500 of this amount may be in subsidized loans.||$10,500-No more than $4,500 of this amount may be in subsidized loans.|
|Third Year and Beyond||$7,500-No more than $5,500 of this amount may be in subsidized loans.||$12,500-No more than $5,500 of this amount may be in subsidized loans.|
|Graduate Students||Not Applicable||$20,500|
|Maximum Total Debt from Subsidized and Unsubsidized Loan||$31,000-No more than $23,000 of this amount may be in subsidized loans.||
$57,500 for undergraduates. No more than $23,000 of this amount may be in subsidized loans.
$138,500 for graduates. The graduate debt limit includes all federal loans received for undergraduate study.
Note: The maximum total loan limits include any subsidized or unsubsidized federal Stafford loans you may have received under the Federal Family Education Loan (FFEL) Program. As a result of legislation, no further loans are made under the FFEL Program as of July 1, 2010.
What are the current interest rates?
Here are the interest rates for loans first disbursed on or after July 1, 2018 and before July 1, 2019.
|Undergraduate Students||Graduate Students|
|Direct Subsidized Loans||5.05%||N/A|
|Direct Unsubsidized Loans||5.05%||6.6%|
If you already have federal student loan and would like to check the interest rate, servicer information, and other financial aid history go to the National Student Loan Data System.
Other than interest, is there a charge for this loan?
Yes, there is a 1% loan fee on all Direct Subsidized and Unsubsidized Loans. The loan fee will be proportionately deducted from each loan disbursement.
How will I receive my loan?
Your loans will be available each semester according to the disbursement schedule. Loans and any other aid such as Federal Pell Grant, Minnesota State Grant, FSEOG and Federal Perkins Loan will be applied to your bill.
Once your bill (charges for tuition, fees, and residence hall) is paid, any aid remaining will be direct deposited to your bank account. If aid is applied to your bill and there is still an amount owed, you should be prepared to pay that amount with a personal check or other funds.
Direct loan funds can only be held for 3 days, you must notify the Financial Aid Office if you will be late registering so that your loan funds are not returned and your loan cancelled.
When do I have to pay back my loans?
When you receive your first Direct Loan, you will be contacted by your loan servicer (you repay your loan to the loan servicer).
Your loan servicer will provide regular updates on the status of your Direct Loan, and any additional Direct Loans that you receive.
After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you are required to begin repayment. During this period, you'll receive repayment information from your loan servicer, and you'll be notified of your first payment due date.
Payments are usually due monthly. Learn more about your repayment options.
What types of loan repayment plans are available?
There are several repayment options available that are designed to meet the individual needs of borrowers. Your loan servicer can help you understand which repayment options are available to you.
Generally, you'll have 10 to 25 years to repay your loan, depending on the repayment plan that you choose. Learn more about repayment options.
What if I have trouble repaying the loan?
If you are unable to make your scheduled loan payments, contact your loan servicer immediately. Your loan servicer can help you understand your options for keeping your loan in good standing.
For example, you may wish to change your repayment plan to lower your monthly payment or request a deferment or forbearance that allows you to temporarily stop or lower the payments on your loan.
Learn more about deferment or forbearance options.
To find out who your loan servicer is to to the National Student Loan Data System.
Can my loan be canceled, forgiven or discharged?
Yes. Before your loan money is disbursed, you may cancel all or part of the loan at any time be notifying your school. After your loan is disbursed, you may cancel all or part of the loan within certain time frames.
Your promissory note and additional information that you receive from Winona State will explain the procedures and time frames for canceling your loan.
Under certain conditions, you may have all or part of your loan canceled, discharged, or forgiven. Find out about loan cancellation, discharge or forgiveness.