Dependent students can borrow a total of $31,000 in combined unsubsidized and subsidized loans, while independent undergraduate students can borrow up to $57,500 total. Graduate or professional students can borrow a total of $138,500 in Direct Unsubsidized Loans, including any undergraduate loans.
Strategy 3: Start With Your Unsubsidized Loans
A subsidized loan doesn't start accruing interest until you've graduated and you're out of deferment. Unsubsidized loans, on the other hand, start gathering interest as soon as you borrow them. It makes sense, then, to work on paying off these loans first.
Direct Subsidized Loans are available only to undergraduate students who have financial need. Direct Unsubsidized Loans are available to both undergraduates and graduate or professional degree students. You are not required to show financial need to receive a Direct Unsubsidized Loan.
For example, a dependent undergraduate may have up to a maximum of $31,000 in combined subsidized and unsubsidized outstanding loan debt, but no more than $23,000 of this amount may consist of subsidized loans.
Public Service Loan Forgiveness (PSLF)
Another perk subsidized and unsubsidized student loans offer is access to PSLF. With PSLF, any student loan debt remaining after 120 qualifying payments is forgiven tax-free. To be approved for PSLF, you must be on one of the four qualifying repayment plans mentioned earlier.
Given the option, you should accept a Direct Subsidized Loan first. Then, if you still need additional financial aid to pay for college or career school, accept the Direct Unsubsidized Loan.
' Those are the only two types of federal student loans that cannot combine together. In other words, if you consolidate all of your loans at once, you might end up with two loans total: Direct Subsidized Consolidation Loan. Direct Unsubsidized Consolidation Loan.
Does aid run out? Yes, in the sense that there are annual limits on how much you can borrow or qualify for in Pell Grant funding. Federal loan limits are based on your enrollment year, dependency status, and type of loan. Colleges have a limited pool of money, so filling out the FAFSA earlier is better.
Federal Direct Student Loans
If, for example, your subsidized loan total in year one as a dependent undergrad is $3,500, you are limited to $2,000 in unsubsidized loans for that year. If your subsidized total is less than $3,500, the difference between that and $5,500 can be unsubsidized loans.
However, if you received less than the maximum Subsidized Loan award for your academic level and your financial situation has changed significantly since you filed your FAFSA, you should talk to the financial aid administrator at your school to find out if the subsidized loan award can be increased.
Subsidized Loans do not accrue interest while you are in school at least half-time or during deferment periods. Unsubsidized Loans are loans for both undergraduate and graduate students that are not based on financial need.
Cons: Lower lending limits.
For a second-year undergraduate student, the borrowing limit is $4,500; for third- and fourth-year students, the limit is $5,500. Con: Must establish financial need. Subsidized loans are only awarded to those who can clearly document financial need.
Federal financial aid regulation states that if you withdraw from all of your classes or cease enrollment prior to the 60 percent point of instruction in any term, you will be required to repay all unearned financial aid funds received. A calculation will be performed to determine the repayment amount.
If you have a Direct Unsubsidized Loan, you have the option to pay interest while you are in school, or you can wait until you are no longer enrolled. Our office recommends that you pay the interest to minimize your loan debt.
While unsubsidized student loans are more expensive than subsidized loans, they also have some advantages compared with private student loans, including lower interest rates and more flexible repayment options.
You're not making satisfactory academic progress at your school. You've defaulted on an existing federal student loan. You owe a refund on any previous federal grants. You're enrolled in an academic program that makes you ineligible for funding.
Request Additional Federal Student Loans
If you've exhausted other options and still need additional funds to help you pay for school, contact your school's financial aid office to find out if you're eligible for additional federal student loans.
Financial Aid recipients will be terminated upon reaching 150 percent of the number of credits needed to complete their degree, diploma or certificate program. This regulation applies to all students, including those that have not previously received financial aid.
How can I increase the amounts of federal loans I have borrowed to cover additional expenses? If you need to increase your loan eligibility to cover additional expenses, submit an online request and supporting documentation through FAST. Log in to FAST and follow the link to the Document Library.
When your loan is disbursed, the lender pays the school directly. The college then applies your funds to its required academic expenses, such as tuition or dorm fees. Any leftover money is issued to you as a student loan refund. The additional funds may be sent to you via direct deposit, school debit account or check.
There are a few reasons your account may unexpectedly list a balance of zero: You got a new loan servicer. It's common for loan servicers to change, so your account may be zero with your old servicer if your loan amount was transferred to another servicer.
All Direct Loan funds will be made available electronically to your school for disbursement to the student or parent; the Department will send no checks to your school, students, or parents.