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Federal Direct Stafford Loans

What are Direct Subsidized and Unsubsidized Loans?

A Direct Subsidized or Unsubsidized Loan is a student loan in the student’s name for educational purposes. The loan funds come from the government and are categorized as either “subsidized” or “unsubsidized". Loan repayment is deferred while the student is enrolled in school at least half-time and during the 6-month grace period after the student either graduates or drops below half-time. When the grace period is finished, the student starts repayment on the loan. However, if the student decides to go to graduate school, the loan will go back into deferment.

What is the difference between a “Subsidized” and an “Unsubsidized” Direct Loan?

The financial need of the student determines whether a loan is subsidized. The federal government “subsidizes” the interest of the loan, i.e. pays the interest, while the student is enrolled at least half-time and during the grace period.*

An unsubsidized loan is not awarded based on financial need. The student will be charged interest on the loan from the time it disburses until it is paid in full. The student has two options: to defer interest payments until graduation, in which case the interest will be added to the principal amount of the loan, or, to pay the interest while in school and not have it accrue. The interest rate on Direct Unsubsidized Loans will differ depending on whether the student is an undergraduate or graduate student.

How much can the student borrow in Direct Subsidized and Unsubsidized Loans?

Dependent undergraduates have a Direct Loan maximum amount that they can borrow per academic year:

  • $5,500 for freshmen, of which a maximum of $3,500 may be Subsidized
  • $6,500 for sophomores, of which a maximum of $4,500 may be Subsidized
  • $7,500 for juniors, of which a maximum of $5,500 may be Subsidized
  • $7,500 for seniors, of which a maximum of $5,500 may be Subsidized

Independent undergraduates can borrow the same amounts as above, plus an additional $4,000 of Direct Unsubsidized Loan for freshmen and sophomores, and $5,000 for juniors and seniors.

What is the interest rate?

Below is a table that displays the interest rates for loans disbursed (paid out) on or after July 1, 2020 and before July 1, 2021:

 Fixed Interest Rate for Loans First Disbursed
July 1, 2020 through June 30, 2021

Undergraduate Stafford
(Subsidized and Unsubsidized) 


Graduate Stafford


 Please note that the following origination fees will apply to each loan disbursement:

  • 1.059% for loans first disbursed on or after 10/1/19 and before 10/1/20 

How does the student apply?

  1. Complete the FAFSA.
  2. Complete any documents requested by the Student Financial Services Office.
  3. The student must accept loans online on myWheaton--this gives the Student Financial Services Office permission to transmit information to the Department of Education.
  4. First-time borrowers must complete Loan Entrance Counseling.
  5. First-time borrowers must complete a master promissory note (MPN).

Where do I go for entrance counseling and to sign the MPN?
Studentloans.gov You will need to use your FSA ID to access the site and to sign the MPN. If you do not have an FSA ID, you may obtain one at the FSA ID web site.

IMPORTANT: On the website, there is important information about browser requirements under "What You Need". If you do not have a compatible browser, various features will not work.