How to Apply for Federal Direct Subsidized/Unsubsidized Loans
You must fulfill Penn State and Federal Financial Aid Eligibility Requirements in order to be eligible for Direct Subsidized/Unsibsidized Loans. In order to be eligible, you must:
- Be enrolled in a degree-seeking program
- Enroll for six credits, or five credits for graduates, half-time.
- Meet the minimum requirements for Satisfactory Academic Progress
- Not be in default on previous federal direct loans
You will automatically be considered for Direct Subsidized and Unsubsidized Loans if you submit the Free Application for Federal Student Aid (FAFSA). The loans will be added to your student aid Award Summary in LionPATH once awarding begins for the academic year (April for first time students and July for returning students).
First-time borrowers also need to complete Entrance Counseling and a Master Promissory Note at studentaid.gov. In most cases, you will only need to complete these items once during your college career.
Once you’ve fulfilled these requirements, your subsidized or unsubsidized loans will show up as a credit on your tuition bill.
- Complete your loan counseling requirement by logging ontostudentaid. gov and open “Complete Counseling”.
- Sign a MPN* by logging onto studentaid. select the Direct Loan MPN you wish to review or finish from gov.
*If you experience any technical issues signing the MPN, please get in touch with the U S. Department of Educations Student Loan Support Center at 800-557-7394.
Comparison of Direct Subsidized and Unsubsidized Loans
Direct Subsidized Loan |
Direct Unsubsidized Loan |
| Based on financial need | Not based on financial need |
| The federal government pays the interest on the loan while you are enrolled in school at least half-time. |
Interest begins accumulating as soon as funds are disbursed until the loan is paid in full. Accrued interest will be added to the balance of the loan. (You are not required to pay the interest while you are in school, but we recommend that you do, if possible.) |
Due to the Bipartisan Student Loan Certainty Act of 2013, Direct Loans interest rates will be tied to the financial market. Under the new interest rate structure, rates will be determined each June for new loans and will be fixed for the life of the loan. The rates are calculated using a 10-year Treasury Note Index plus an add-on amount for each loan program and include interest rate caps. Learn more about how interest is calculated from the U.S Department of Education.
For Direct Loans that are first disbursed on or before July 1, 2022 and before July 1, 2023, the following fixed interest rates apply.
| Direct Subsidized Loan for undergraduate students | 4.99% |
| Direct Unsubsidized Loan for undergraduate students | 4.99% |
| Direct Unsubsidized Loan for graduate students | 6.54% |
For Direct Loans disbursed on or before July 1, 2024, and on or after July 1, 2023, the following fixed interest rates apply.
| Direct Subsidized Loan for undergraduate students | 5.50% |
| Direct Unsubsidized Loan for undergraduate students | 5.50% |
| Direct Unsubsidized Loan for graduate students | 7.05% |
The loan origination fee is a fee charged by your lender upon entering into a loan agreement to cover the cost of processing the loan. This agreement will be made when you sign the Master Promissory Note (MPN) at studentaid.gov. The fee will be taken out of the gross amount of your loan when the funds are disbursed to the school. See examples of net vs gross amounts below.
| The origination fee for Direct Subsidized/Unsubsidized loans first disbursed on/after Oct 1, 2019 and before Oct 1, 2020 | 1.059% |
| The origination fee for Direct Subsidized/Unsubsidized loans first disbursed on/after Oct 1, 2020 and before Oct 1, 2023 | 1.057% |
Net vs. Gross Amount of Loan
Both the Award Summary and Bursar Tuition Bills sections of LionPATH will list your Direct Subsidized or Unsubsidized Loan; the loan amounts, however, will differ.
The gross loan amount appears on the Student Aid Award Summary.
Following the deduction of loan origination fees, the net amount will be displayed in the Bursar Tuition Bills section.
After classes start, the money from your loan will automatically be disbursed to your student account once you have accepted it.
A $2,750 direct subsidized loan is granted to you for a single semester:
- $2,750 is your gross loan amount.
- Your net loan amount, which is the gross amount less the origination fee, is $2,721 that will be credited to your student account.
A $1,000 Direct Unsubsidized Loan is granted to you for a single semester:
- $1,000 is your gross loan amount.
- Your net loan amount, which is the gross amount less the origination fee, is $990 that will be credited to your student account.
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Information for
FAQ
How do students apply for a direct Stafford?
Fill out the FAFSA online or, for returning students, the Renewal FAFSA at FAFSA ed. gov. The financial aid office at your school will send you an email or letter of financial aid award. This letter will list all of the financial aid that is available to you, including the Direct Unsubsidized Loan and the Direct Subsidized Loan, if you qualify.
How does a student qualify for a Stafford Loan?
Students who want to apply for a Stafford Loan must first fulfill the prerequisites for Federal Student Aid (FSA) funding, which include citizenship and registration in Selective Service, if necessary. ). In order to be eligible for a loan, the student must also be enrolled at least half-time.
Which form must students complete to apply for direct Stafford Loan?
The Free Application for Federal Student Aid (FAFSA®) form must be filled out and submitted before you can apply for a Direct Loan. The data from your FAFSA form will be used by your school to calculate the amount of student aid you qualify for.
Is a Stafford Loan the same as a direct student loan?
Federal Direct loans have since taken their place, though the terms are occasionally used synonymously. For undergraduate, graduate, and professional students, a “Stafford loan”—or, more accurately, a Direct loan—can assist in helping to pay for necessary educational expenses.
Read More :
https://studentaid.gov/help-center/answers/article/stafford-loan
https://www.edvisors.com/ask/faq/apply-for-stafford/