The Federal Direct Subsidized/Unsubsidized Student Loan program is the most widely used student loan program. Borrowing limits, interest rates, and terms of repayment are defined by the U.S. Department of Education.
Many students have both subsidized and unsubsidized Direct Subsidized/Unsubsidized Loans during the same semester.
Subsidized Loans are based on financial need. The federal government pays the interest while you are enrolled at least half-time and during your six-month grace period. Your grade level (freshman, sophomore, etc.), any additional financial aid awards you might have, your Expected Family Contribution (EFC) (determined from your FAFSA), and your estimated cost of attendance are all factored into the eligibility decision.
The amount of Federal Direct Subsidized/Unsubsidized Loan that you can borrow per year is determined by the number of credits you have earned toward your program or major:
|Grade Level/Credits Earned Toward Your Program/Major||Dependent Students Annual Loan Limit||Independent Students (or dependent student with PLUS denial) Annual Loan Limit|
Less than 30 credits earned toward degree or certificate
($3,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized)
($3,500 between subsidized and unsubsidized, plus an additional $6,000 unsubsidized)
30 or more credits toward an associate's degree or certificate or 30 to 59 credits toward a bachelor's degree
($4,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized)
($4,500 between subsidized and unsubsidized, plus an additional $6,000 unsubsidized)
Junior or Senior
60 or more credits toward a bachelor's degree
($5,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized)
($5,500 between subsidized and unsubsidized, plus an additional $7,000 unsubsidized)
Aggregate (lifetime) loan limit
(no more than $23,000 can be subsidized)
(no more than $23,000 can be subsidized)
The U.S. Department of Education deducts an origination fee of 1.057% (from Oct. 1, 2020 through Sep. 30, 2023) from the loan proceeds at the time of disbursement. Therefore, the loan amount the College receives on your behalf, and posts to your eBill, will be less than the principal you have to repay.
To be eligible for a Federal Direct Subsidized/Unsubsidized Loan, you’ll need to meet specific requirements:
- You must submit your FAFSA for each year you intend to apply for this loan.
- You must be enrolled in 6 or more credits each semester.
- You may not be in default on any federal educational loan or owe a refund on an educational grant.
- You must maintain satisfactory academic progress toward the completion of your degree or certificate.
- You will automatically be considered for a Federal Direct Student Loan if you meet the eligibility requirements listed above and have not met your aggregate limit. However, you must complete a Direct Loan Master Promissory Note (MPN) and Direct Loan Entrance Counseling to accept your loans. We recommend you complete these steps in May or June after you have committed to attend Penn College.
After you apply, you can learn if the Financial Aid Office has received the two parts to the Direct Loan application process by checking the Financial Aid Award Summary page on the Student Information System (SIS). Allow 2-4 weekdays.
To apply for a Federal Direct Subsidized/Unsubsidized Loan:
- Submit – or review and revise, if needed – your Penn College Financial Aid Authorization (FAA)
- Complete a FAFSA for the academic year before March 1, Penn College's Priority Application Deadline
- Complete Direct Loan Entrance Counseling * during May or June
- Complete a Direct Loan Master Promissory Note (MPN) * during May or June
* These steps are not necessary if you have borrowed through the Direct Subsidized/Unsubsidized Loan Program in the past twelve (12) months.
Your Federal Direct Subsidized/Unsubsidized Loan will be disbursed once each semester, around the start of the semester, as long as you complete each of the application steps. We will credit your eBill with the maximum Federal Direct Subsidized/Unsubsidized Loan amounts, less the origination fees deducted by the U.S. Department of Education. If your student bill shows a credit balance, you will receive a refund.
If you are transferring to Penn College from another college, ask your prior college to cancel the next disbursement of your Federal Direct Subsidized/Unsubsidized Loan; then contact the Financial Aid Office to transfer your loan application to Penn College.
If you do not wish to accept the maximum amount (i.e., if you wish to minimize your debt), you may contact the Financial Aid Office, in writing or by email, to cancel any part, or all, of your Federal Direct Subsidized/Unsubsidized Loan funds. Your cancellation request must include your full name, your student ID number, and the total amount you wish to have canceled.
Refer to your Loan Disclosure Statement that you receive from the Federal Direct Loan servicer for more information.
Repayment of a Federal Direct Subsidized/Unsubsidized Loan begins 6 months after you graduate, withdraw, drop below half-time (5 or fewer credits) status, or stop attending. You can choose to make interest payments while you are enrolled in college, and you have up to 10 years to repay the loans. If you withdraw from all classes, or drop below half-time status, or graduate, you must complete Exit Counseling for your Subsidized/Unsubsidized Loan.
The U.S. Department of Education calculates an annual Cohort Default Rate for all colleges with federal student loan borrowers. The rate is the percentage of a colleges' federal student loan borrowers who enter repayment during a specific federal fiscal year and default on their loan payments before the end of the following two fiscal years.
As of September 30, 2021, Penn College's Cohort Default Rate was 7.1% and the national Cohort Default Rate was 7.3%. During the 2020-21 academic year, 66.99% of Penn College students borrowed through a federal student loan or private alternative loan program.
Deferment / Forbearance
Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily postpone or reduce your loan payments. You will need to work with your loan servicer to apply for these options.
View Your Federal Aid
Head over to the U.S. Department of Education to view your federal aid. Log in using your federal FSA ID. Then, go to 'My Aid' and 'View Details' to see federal loan(s), outstanding balances, loan statuses, and disbursement info. If you’ve ever been awarded a Federal Pell Grant, you will see that here as well.