Federal Direct Loan Program

Federal Direct Loans are low-interest loans awarded to eligible students who file the Free Application for Federal Student Aid (FAFSA). You must be enrolled in a degree-seeking program for at least 6 credits in any given semester to qualify.

There are two types of loans: Subsidized and Unsubsidized Loans. Subsidized loans do not accrue interest until after graduation. Unsubsidized loans start accruing interest upon disbursement.

The Department of Education is the lender for all Federal Direct student loans. Loan funds are disbursed by the Department of Education to the University approximately 10 days before the start of classes each semester.

Loans are typically divided equally between fall and spring semesters. Depending on the program, loans can be split between summer, fall, and spring semesters.

Eligibility

To be eligible for Federal Direct Loans, students must:

  • Have a valid FAFSA on file for the current academic year. 
  • Be enrolled in at least 6 credits.
  • Not have met or exceeded their annual or aggregate loan limit (see below). 
  • Demonstrate financial need for the Federal Direct Subsidized Loan. 

Subsidized loans are need-based loans awarded to eligible undergraduate students. Eligibility for Subsidized loan funds is based on a student's financial need as determined by the information listed on the FAFSA and the cost of attendance for their program. Graduate students are no longer eligible to receive Federal Direct Subsidized Loans. 

How to Apply

  1. Complete the FAFSA (UMB School Code: 002104).
  2. Once the aid offer is available, accept loan amount in SURFS
  3. Fill out the Online Direct Loan Request Form. 
  4. Complete Entrance Counseling
  5. Complete the Master Promissory Note (MPN) Once the MPN has been completed for UMB they are valid for 10 years and do not need to be done each year. 

Loan Terms

When taking out a federal student loan, it's important to understand the terms and conditions. Origination fees apply, meaning a portion of the loan amount is deducted upfront to cover administrative costs.

July 1, 2024 - June 30, 2025

Subsidized

 Unsubsidized Origination Fee1 Grace Period2
Dependent Undergraduates 6.53% 6.53% 1.057% 6 months
Independent Undergraduates 6.53% 6.53% 1.057% 6 months
Graduate Students N/A 8.08% 1.057% 6 months
Medical and Dental Students N/A 8.08% 1.057% 6 months

1Fee applies to loans first disbursed between Oct. 1, 2020 and Sept. 30, 2024
2Amount of time after student graduates, drops below half-time status, or leaves school before first payment is due

Loan Limits

Program Annual Limits Aggregate Limits
  Subsidized1 Unsubsidized Combined2 Subsidized1 Unsubsidized1 Combined2
Dependent Undergraduates $5,500 $2,000 $7,500 $23,000 $8,000 $31,000
Independent Undergraduates 3 $5,500 $7,000 $12,500 $23,000 $34,500 $57,500
Graduate Students $0 $20,500 $20,500 $65,500 $73,000 $138,500
Medical & Dental Students $0 $40,500 $40,500 $65,500 $158,500 $224,000

1 If eligible
2 Total unsubsidized loan eligibility if student is not eligible for subsidized loans
3 These limits also apply to students whose parents were denied Parent Plus Loans

Interest

Interest for Federal Direct Unsubsidized loans begins to accrue upon disbursement of the loan, and is calculated on a daily basis by your loan servicer. 

Calculating Interest

Divide your interest rate (converted to decimal) by 365.25 (number of days in a calendar year), this gives you the Interest Rate Factor. The interest rate factor for a 6.21 percent Stafford Loan is 0.000170021.

(Interest rate (converted to decimal) / 365.25 (number of days in a calendar year) = Interest Rate Factor)

Then multiply the Interest Rate Factor by your outstanding principal balance. This is the amount of interest that is accruing daily.

Interest Rate Factor x Outstanding Principal balance = Accruing daily