Federal Direct Loans

Subsidized and Unsubsidized

The Federal Direct Loan program is the U.S. Department of Education’s major form of self-help aid. Direct loans are either subsidized or unsubsidized and interest on both loans are fixed. A subsidized loan is awarded on the basis of financial need. The federal government pays the interest on the loan (“subsidizes” the loan) until the student begins repaying the loan.

An unsubsidized loan is not awarded on the basis of need. Students are charged interest from the time the loan is disbursed until it is paid in full. If the interest is allowed to accumulate on an unsubsidized loan, it is “capitalized,” or added to the principal amount of the loan, thus increasing the repayment amount.

If a student chooses to pay the interest as it accrues, he or she will have less to repay later. A student must be enrolled in an eligible program of study and enrolled at least half-time to be eligible for a direct loan.

Loan eligibility is established by the Department of Education. Certain conditions may be applicable and may decrease the total annual amounts or type of loans required.

The maximum loan eligibility for a student depends upon class standing:

  • Freshmen: $5,500 ($3,500 of which can be subsidized)
  • Sophomore: $6,500 ($4,500 of which can be subsidized)
  • Junior: $7,500 ($5,500 of which can be subsidized)
  • Senior: $7,500 ($5,500 of which can be subsidized)

Students are required to complete entrance counseling and a Master Promissory Note (MPN) prior to receiving loan funds. Students must complete exit counseling prior to leaving UPIKE.


Direct PLUS Loan

Federal Direct PLUS Loans enable parents or stepparents with good credit histories to borrow funds for the educational expenses of each child who is a dependent undergraduate student enrolled at least half-time. Eligibility is based on credit rating and is not based on income. The interest rate is variable and accumulates on the loan from the date of the first disbursement until the loan is paid in full unless a request is made for a deferment and a six month grace period during the parent plus loan credit check.

The yearly limit on the PLUS loan is equal to the student’s cost of attendance minus any other financial aid that is received. Students are allowed an additional $4,000-$5,000 per year toward their unsubsidized loan if the parents are denied credit when applying for a direct PLUS loan. This amount is based upon student’s current grade level.

How To Apply

To apply for a PLUS Loan follow the steps below:

Complete a PLUS application at www.studentloans.gov. After entering your information, you will be notified whether you have been approved or denied. UPIKE will receive a report of your PLUS approval or denial.

If approved, complete a Master Promissory Note (MPN) at www.studentloans.gov to electronically sign your MPN, using your Federal Student Aid FSA ID.