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.
Your grade level and enrollment classification, any additional financial aid awards you might have, your Student Aid Index (SAI) as determined from your FAFSA, and your estimated cost of attendance are all factored into the eligibility decision.
Note that all students with a finalized FAFSA are offered this loan by way of their Financial Aid Offer via the Student Portal.
The interest rate is fixed at 6.39% for Direct Subsidized/Unsubsidized Loans first disbursed on or after 7/1/2025, and before 7/1/2026. The FAFSA is required.
The U.S. Department of Education deducts an origination fee of 1.057% (through Sep. 30, 2026) from the loan proceeds at the time of disbursement. Therefore, the loan amount the College receives on your behalf, and posts to your bill, will be less than the principal you have to repay.
The maximum amount of Federal Direct Subsidized/Unsubsidized Loan that you can borrow per award year is determined by your grade level, dependency status and enrollment classification.
The chart below is based on full-time enrollment.
| Grade Level/Credits Earned Toward Your Program/Major | Dependent Students Award Year Loan Limit | Independent Students (or dependent student with PLUS denial) Award Year Loan Limit |
|---|---|---|
Freshman Less than 30 credits earned toward degree or certificate | $5,500 ($3,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized) | $9,500 ($3,500 between subsidized and unsubsidized, plus an additional $6,000 unsubsidized) |
Sophomore 30 or more credits toward an associate's degree or certificate or 30 to 59 credits toward a bachelor's degree | $6,500 ($4,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized) | $10,500 ($4,500 between subsidized and unsubsidized, plus an additional $6,000 unsubsidized) |
Junior or Senior 60 or more credits toward a bachelor's degree | $7,500 ($5,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized) | $12,500 ($5,500 between subsidized and unsubsidized, plus an additional $7,000 unsubsidized) |
| Aggregate (lifetime) loan limit | $31,000 (no more than $23,000 can be subsidized) | $57,500 (no more than $23,000 can be subsidized) |
How might my enrollment classification impact my award year amounts?
To be eligible for a Federal Direct Subsidized/Unsubsidized Loan, you’ll need to meet specific requirements:
To apply for a Federal Direct Subsidized/Unsubsidized Loan:
* These steps are not necessary if you have borrowed through the Direct Subsidized/Unsubsidized Loan Program in the past twelve (12) months.
To accept your Federal Direct Subsidized/Unsubsidized Loan on the Student Portal:
Note that you must have completed all the 'Apply' steps to have loan funds disburse at the start of the semester.
First reduce the currently offered gross amount of your Federal Direct Subsidized/Unsubsidized Loan on the Student Portal to the amount you wish to borrow; keep in mind this will reduce your loan evenly across the fall and spring semesters:
Note that you must have completed all the 'Apply' steps to have loan funds disburse at the start of the semester.
To decline the entire amount of your Federal Direct Subsidized and/or Unsubsidized Loan on the Student Portal:
Note that you must have completed all the 'Apply' steps to have loan funds disburse at the start of the semester.
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 bill 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.
You have the option to either reduce or decline your loan(s).
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 10 to 30 years to repay the loan, depending on the repayment plan you choose. 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 college's 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, 2025, Penn College's Cohort Default Rate was 0.0% and the national Cohort Default Rate was 0.0%. During the 2020-21 academic year, 66.99% of Penn College students borrowed through a federal student loan or private alternative loan program.
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.
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.