Federal Direct Loans are low-interest student loans, offered through the U.S. Department of Education, that assist eligible students in covering the cost of higher education.
There are two types of Direct Loans: subsidized and unsubsidized
You must have financial need to receive a subsidized loan. With a subsidized Direct Loan, the federal government will pay the interest while you are enrolled at least half-time, during your grace period and during deferment periods. Financial need is not a requirement to receive an unsubsidized loan. Interest accrues on an unsubsidized Direct Loan starting from the date the loan is first disbursed. The student borrower may pay interest quarterly on an unsubsidized loan.
Graduate students are not eligible for subsidized Direct Loans per federal regulation. Unsubsidized Direct Loans are still available.
Students must file the Free Application for Federal Student Aid (FAFSA) each year to be considered for Direct Loans.
Direct Loan Process
Direct Loans may be accepted or declined after July 1 each year. The process for receiving Direct Loans is detailed below. Don't forget you must file the Free Application for Federal Student Aid (FAFSA) each year to be considered for Direct Loans.
Step 1. Log on to myUSI at https://my.usi.edu.
Step 2. Determine whether or not you need to borrow and how much. For a list of USI’s tuition and fees visit https://www.usi.edu/bursar/tuition-fees/. Estimate your costs and subtract grants and scholarships to help you with this decision.
Step 3. After July 1, accept, decline or enter the amount needed of your Direct Loan. Accept only the amount you need. The Direct Loan is a loan you must pay back. Direct Loans may not be discharged in bankruptcy, and defaulting results in serious consequences.
Step 4. First-time Direct Loan borrowers must complete entrance counseling online at StudentAid.gov.
Step 5. First-time Direct Loan borrowers must sign the Master Promissory Note (MPN) online at StudentAid.gov.
Direct Loan Annual Limits
| Classification | Hours Earned | Annual Maximum Subsidized | Additional Unsubsidized | Annual Maximum (Dependent Students) |
| Freshman | 0-29 | $3,500 | $2,000 | $5,500 |
| Sophomore | 30-59 | $4,500 | $2,000 | $6,500 |
| Junior | 60-89 | $5,500 | $2,000 | $7,500 |
| Senior | 90+ | $5,500 | $2,000 | $7,500 |
| Graduate (Independent Student) | Unavailable | $20,500 | $20,500 |
Direct Loan Total (Lifetime) Limits
| Level | Subsidized | Total |
| Dependent Undergraduate | $23,000 | $31,000 |
| Independent Undergraduate | $23,000 | $57,500 |
| Graduate | Unavailable | $138,500 |
Enrollment Requirements
Students must be enrolled at least half-time to receive Direct Loans.
- 6 credit hours for undergraduate students
- 3 credit hours for graduate students (graduate level courses)
Additional Eligibility
In addition to the amounts listed above, independent students with less than 60 earned hours are eligible for an additional $4,000 per year, and those with greater than 60 earned hours are eligible for an additional $5,000 per year. A dependent student whose parent is denied a Parent PLUS Loan may be eligible to borrow additional funds under the Direct Loan Program. A Loan Adjustment Form and verification of the Parent PLUS Loan denial will be required by our office. A USI financial aid counselor can provide information on additional eligibility.
Interest Rates
| Loan Type | Grade Level | First Disbursed Between 07/01/24-06/30/25 |
First Disbursed Between 07/01/23 - 06/30/24 |
| Subsidized | Undergraduate | 6.53% | 5.50% |
| Unsubsidized | Undergraduate | 6.53% | 5.50% |
| Graduate | 8.08% | 7.05% | |
| PLUS | Parent and Graduate Student | 9.08% | 8.05% |
Processing Fees
The U.S. Department of Education charges a loan fee of 1.057% of the principal amount of each Direct Student Loan for loans disbursed on or after 10/1/20 and before 10/1/25. This fee is deducted proportionately from each loan disbursement.
Repayment
Repayment of Direct Loans begins six months after graduating, dropping below half time or leaving school.
View more information about loan repayment online.