All Direct Loans are either subsidized or unsubsidized. With subsidized loans, interest does not accrue until after students graduate or leave school. To receive a subsidized Direct Loan, you must have financial need.
With unsubsidized loans, interest begins to accrue after the first disbursement. We recommend that students make payments on the interest while they are in school to reduce the total loan balance at the point of graduation.
Many students combine subsidized loans with unsubsidized loans to borrow the maximum amount permitted each year.
View the Annual Federal Direct Loan Limits
For more information, view your Direct Loan Borrower's Rights and Responsibilities.
Interest Rate and Origination Fee
View the Federal Student Loans: Repaying Your Loans Guide
The interest rate for Federal Direct Student Loans depends on when the loan was first disbursed. Visit the Federal Student Aid Interest Rates for information about current and past rates. Interest rates are determined each spring for new loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan has a fixed interest rate for the life of the loan.
The Department of Education charges an "Origination fee" on all Direct Subsidized Loans and Direct Unsubsidized Loans. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement. See the Federal Student Aid Loan Fees for the current percentages.
How to Apply
To apply for either the subsidized or unsubsidized Federal Direct Loan, you must:
- Apply for Financial Aid
- Accept your Federal Direct Loan through My Aid Status
- Complete a Direct Loan Entrance Interview
- Complete a Subsidized/Unsubsidized Master Promissory Note
As long as your requirements are completed, Subsidized and Unsubsidized loans generally take 3-5 business days to disburse to your BARC (billing) account.
When you graduate or permanently leave UCSB, you must complete the Direct Loan Exit Counseling.
Repayment for Subsidized and Unsubsidized Direct Loans begins six months after a student leaves school or drops below half-time enrollment. Information about your loans is submitted to the National Student Loan Data System (NSLDS), which is the database where you may view your entire federal loan history. Please visit NSLDS to view your borrowed loan amounts, disbursement dates, and who your federal loan servicer is as well as their contact information. The federal loan servicer is assigned by the Department of Education, and they handle matters related to billing and repayment of your loans. If you have questions about changing your repayment plan, loan consolidation, or if you qualify for loans forgiveness, please talk to your servicer.
We suggest you utilize Federal Student Aid’s Repayment Estimator while you are in school to see approximately how much a month you will owe post-graduation.