Loans

Subsidized and Unsubsidized Loans

The Federal Direct Subsidized Loan and Federal Direct Unsubsidized Loan are two types of low-interest student loans offered under the U.S. Department of Education's Federal Direct Loan program. The U.S. Department of Education is the lender for both of these loans.

Federal Direct Subsidized Loan

The Federal Direct Subsidized Loan is a need-based loan, which is available to undergraduate students enrolled on a half-time basis (6 or more credit hours) who are considered to have financial need. Financial need is determined by subtracting a student's Expected Family Contribution (EFC) Number, as calculated by FAFSA, from the school's Cost of Attendance.

The federal government subsidizes the interest on this loan while the student is enrolled at least half-time. This means that interest does not accrue on the Subsidized Loan until six months after the student has graduated or ceased attendance on a half-time basis.

Subsidized Usage Limit

Per federal regulations, students that are a first-time loan borrower as of July 1, 2013 or thereafter are subject to a limit on the maximum period of time that they can receive the Federal Direct Subsidized Loan. Students subject to this limit may not receive Subsidized Loans for more than 150% of the published length of their program of study.

For example, a student enrolled in a 4 year bachelor's degree program would be limited to 6 years of eligibility in the Subsidized Loan. (4 years x 150% = 6 years)

Due to the fact that the maximum eligibility period is based on the length of a student's program of study, the maximum eligibility period can change if the student changes to a program with a different length. Additionally, if a student receives a Subsidized Loan for one program and then changes to another program, those loans generally count toward the new maximum eligibility period.

Under the Subsidized Usage Limit regulations, a student becomes responsible for paying the interest on the Federal Direct Stafford Loans when:

  • They are no longer eligible for Subsidized Loans and they are still enrolled in their current program
  • They are no longer eligible for Subsidized Loans, have not graduated from their prior program, and are enrolled in an undergraduate program that is the same length or shorter than their prior program
  • They transferred into a shorter program and lost eligibility for Subsidized Loans because they have received Subsidized Loans for a period that equals or exceeds their new, lower maximum eligibility period

Federal Direct Unsubsidized Loan

The Federal Direct Unsubsidized Loan is a non-need-based loan, which is available to both undergraduate and graduate students enrolled on a half-time basis (6 or more credit hours for undergraduates; 5 or more credit hours for graduates).

The student is responsible for the interest that accrues on the Unsubsidized Loan from the time the loan is disbursed to the school until it is paid in full. Students can choose to pay the interest as it accrues, however, payment is not required while the student is enrolled on a half-time basis. If interest payments are not made while the student is in school, the interest will capitalize and be added to the loan amount. At repayment, interest will be calculated on the amount of the loan plus the accrued interest.

Interest Rates

Interest rates for Direct Subsidized and Unsubsidized Loans are reflected below. These interest rates are fixed rates for the life of the loan.

Loan Type Borrower Type Loans first disbursed on or after 7/1/16 and before 7/1/17
Direct Subsidized Loans Undergraduate 3.76%
Direct Unsubsidized Loans Undergraduate 3.76%
Direct Unsubsidized Loans Graduate 5.31%

Loan Origination Fees

Federal Direct Subsidized and Unsubsidized Loans are subject to a 1.069% loan fee. This fee is proportionately deducted from the loan each time a disbursement is made.

First-Time Borrower Loan Requirements

As a first-time borrower of the Federal Direct Subsidized or Unsubsidized Loan, federal regulations require students to complete Online Loan Entrance Counseling and sign a Master Promissory Note (MPN) through www.studentloans.gov before the school can make a disbursement of these funds.

After having completed these requirements, any future Subsidized and Unsubsidized Loans a student accepts will be linked to the previously completed Entrance Counseling and MPN. The MPN is valid for up to 10 years from the date of the student's first loan disbursement. Once the MPN expires after 10 years, a new MPN will be required before any additional loan disbursements can be made.

Loan Limits

The Federal Direct Subsidized and Unsubsidized Loans are subject to an annual limit, as well as an aggregate limit which sets a maximum on the total amount they can receive in these loans over their college career.

Dependent Undergraduate Students

(whose parents have not been denied a Parent PLUS Loan)

Year Maximum Subsidized Additional Unsubsidized Total Loan Amounts
Freshman/1st Year (including 1 year certificate programs) $3,500 $2,000 $5,500
Sophomore/2nd Year (including 2 year certificate programs and Associate's Degrees) $4,500 $2,000 $6,500
Junior/3rd Year & Senior/4th Year $5,500 $2,000 $7,500
Aggregate Limits $23,000 $8,000 $31,000

Independent Undergraduate Students

(and dependent undergraduate students whose parents have been denied a Parent PLUS Loan)

Year Maximum Subsidized Additional Unsubsidized Total Loan Amounts
Freshman/1st Year (including 1 year certificate programs) $3,500 $6,000 $9,500
Sophomore/2nd Year (including 2 year certificate programs and Associate's Degrees) $4,500 $6,000 $10,500
Junior/3rd Year & Senior/4th Year $5,500 $7,000 $12,500
Aggregate Limits $23,000 $34,500 $57,500

Graduate Students

(aggregate loan limit includes loans borrowed as an undergraduate student)

Year Total Loan Amounts
Each Year $20,500
Aggregate Limits $138,500

Loan Repayment

Loan repayment for the Federal Direct Subsidized and Unsubsidized Stafford Loans begins six-months after the student has graduated or ceases enrollment on a half-time basis (6 or more credit hours for undergraduates; 5 or more credit hours for graduates).

The six-month grace period can only be used one-time. Thus, if a student enters repayment after the six-month grace period and later returns to school, once the student graduates or drops below half-time enrollment, they will immediately go into repayment. Similarly, if a student withdraws, uses four months of their grace period and later returns to school, once they graduate or drop below half-time enrollment, they will only have two months of a grace period remaining. The summer semester does not count against the grace period, unless the student is enrolled for summer and withdraws or drops below half-time during that semester, or is enrolled half-time for spring, does not attend summer, and does not return to school on a half-time basis for the fall semester.

Click here for information regarding loan repayment plans.

Maintaining Eligibility for Loans

To maintain eligibility for the Federal Direct Subsidized and Unsubsidized Loans, students must:

  • Submit a FAFSA
  • Be enrolled in a degree-bound program
  • Be a U.S. Citizen or eligible non-citizen
  • Be making Satisfactory Academic Progress
  • Not be in default on any federal student aid
  • Have not reached aggregate loan limits
Complete the FAFSA

When completing the Free Application for Federal Student Aid (FAFSA), please add Washburn University’s federal school code of 001949.

FAFSA
Financial Aid Forecaster

Better understand your options for paying for college. Use the FAFSA4caster to estimate your eligibility for federal student aid.

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