A Direct Unsubsidized Loan is a federal loan available to both undergraduate and graduate students. You need not demonstrate financial need to qualify for this type of loan but your eligibility will be determined by your cost of attendance minus other forms of financial aid.
While this is similar to the Direct Subsidized loan when it comes to a fixed-interest rate, Direct Unsubsidized loans vary when it comes to charging interest. You are responsible for the interest from the moment it gets disbursed, while you are in school, and during deferment and grace periods. You can choose to pay the interest or allow it to accumulate and be capitalized.
Do I Qualify For The Direct Unsubsidized Loan?
You should meet the following requirements to qualify for Direct Unsubsidized Loan:
- You must possess a valid Social Security number.
- You must be a U.S. citizen or eligible non-citizen.
- You must have satisfactory academic progress.
- You should have no default on any existing federal loans.
- You should possess a high school diploma or the equivalent degree.
- You must register with the Selective Service System (for males ages 18 to 25).
- You must enroll for at least half-time at a school that participates in the Federal Direct Loan program.
How Do I Apply For The Direct Unsubsidized Loan?
You can apply for a Direct Unsubsidized Loan by filing a Free Application for Federal Student Aid (FAFSA) form. While applying, you must provide details regarding your assets and income and those of your parents. The school then uses the details and determines how much money you are eligible to borrow.
How Much Money Can I Borrow?
| Graduate annual loan limits | Loan Amount |
| Graduate | $20,500 |
| Graduate aggregate loan limits | $138,500 (Up to $65,500 Sub) |
| Pharmacy annual loan limits | $33,000 |
| Health professions annual loan limits | $40,500 |
| Health professions aggregate loan limits | $224,000 (Up to $65,500 Sub) |
When Should I Pay Back The Unsubsidized Loan?
You must repay the loan once you graduate, or drop below half-time enrollment, or leave school. However, for Direct Unsubsidized Loans, you can get a six-month grace period before making regular payments.
When the loan enters the repayment period, the loan servicer will automatically place the student on the Standard Repayment Plan. The servicer will provide a loan repayment schedule, including first payment details, the frequency and number of payments, and the amount of each payment. You can request a different repayment plan if you don’t wish to use the Standard Repayment Plan.
Interest And Fees For Federal Unsubsidized Loan
Unlike a subsidized loan, you are responsible for paying the interest from when the loan is disbursed until it is fully paid. You can pay the interest or allow it to accrue and be capitalized. Capitalizing the interest will increase the amount to be repaid.You must pay all the interest even during the grace period, deferment, or forbearance.
Unsubsidized Loans interest rate is 3.73% for undergraduate borrowers and 5.25% for graduate or professional borrowers. Note that the interest rates are for loans first disbursed on or after July 1, 2021, and before July 1, 2022. On the other hand, the loan fee is 1.057%.