Direct Subsidized Loans and Direct Unsubsidized Loans are federal student loans offered by the U.S. Department of Education (ED) to help eligible students cover the cost of higher education. Direct Subsidized Loans and Direct Unsubsidized Loans are also referred to as Stafford Loans or Direct Stafford Loans. For additional information please visit https://studentaid.gov.
You must apply for financial aid using the FAFSA. Depending on the college you are enrolled in, you may be automatically offered a Direct Loan. Contact the individual financial aid office to learn more about their loan application process. Loans can be declined or cancelled upon request by visiting the financial aid office or CUNYFirst account.
Undergraduate students with financial need are eligible for a subsidized Direct Loan. With subsidized loans, no interest will be charged as long as you maintain at least half-time enrollment (6-8 credits) per term. Financial need is the difference between Cost of Attendance and your Student Aid Index.
Subsidized loans taken between 7/1/2024-7/1/2025 are charged a fixed interest rate of 6.53%. The interest will not change throughout the life of the loan. There is no interest charged on your subsidized loan as long as you maintain half-time enrollment at the college. The interest rate varies each year on new loans and is adjusted each July 1st.
All Federal Direct Subsidized or Unsubsidized Stafford Loan, or Federal Direct PLUS loans borrowers are required to complete the Annual Student Loan Acknowledgement even if a Multi-year Master Promissory Note was completed. For detailed information, visit www.studentaid.gov.
You must be enrolled for at least half-time (6-8 credits) per term. You must be enrolled in a degree-seeking program or eligible certificate program.
Unsubsidized loans are charged an interest rate and are available to students who do not qualify for the subsidized loan. The interest accrues while the student attends school. You are eligible to receive an unsubsidized loan to replace all or a portion of the family contribution if there is loan eligibility remaining.
Unsubsidized loans taken between 7/1/2024 -7/1/2025 are charged a fixed interest of 6.53%. The interest will not change throughout the life of the loan. If you borrow an unsubsidized loan, you have the option of paying the interest as it accrues or you can let it be added to the principal of the loan. The interest rate varies each year on new loans and is adjusted each July 1st. Graduate and professional students are charges a fixed rate of 8.08%.
Direct Loan requirements limit borrower eligibility for Direct Subsidized Loans to a period of 150 percent of the length of the borrower’s educational program. For example, 6 years of subsidized loan eligibility for a bachelor’s degree and 3 years for an associate’s degree. Under certain conditions, first-time borrowers who have exceeded the 150 percent limit may lose the interest subsidy on their subsidized loans.
Cost of Attendance
– Student Aid Index
– Estimated Financial Assistance
= Maximum Subsidized Loan Amount
Let’s say you are a dependent student and in your 3rd year of college. Your total cost of attending college is $10,000, which includes: tuition, fees, books, supplies, transportation, lunch, and personal expenses. Your student aid index determined from your FAFSA is $3000 and your total financial aid from grants and scholarships totals $2,000. You have expenses not met of $5000 ($10,000-$3,000-$2,000=$5,000). You could get a subsidized loan for the portion of expenses that were not met which is $5000. If you still need additional money to cover costs, you could receive a maximum of $500 in an unsubsidized loan. You could not exceed $2,500 in an unsubsidized loan since the maximum a 3rd year student could borrow in federal direct loans is $7,500.
$10,000 Cost of Attendance (COA)
– $3,000 Student Aid Index (SAI)
– $2,000 Financial Aid
= $5,000 Portion not met
Cost of Attendance
– Estimated Financial Assistance
= Maximum Loan Amount
$5,000 Maximum Subsidized loan
+ $2,500 Maximum Unsubsidized loan (replaces part of your SAI)
= $7,500 Maximum Direct loan
A dependent student’s maximum eligibility, whether it subsidized or a combination of subsidized and unsubsidized loans, cannot exceed the amounts shown above. An independent student is eligible to borrow additional unsubsidized loans. In cases where the parents of an undergraduate dependent student are denied eligibility for the Parent (PLUS) loan due to a negative credit history, the dependent student may borrow additional unsubsidized loans. Student borrowers do not need a co-signer and there is no credit check needed.
The same way you do the other federal student aid, by completing the Free Application for Federal Student Aid (FAFSA). You will need to submit a loan request form to your CUNY college to get a Stafford loan processed. You will also need to sign a promissory note, a binding legal document that states you agree to repay your loan according to the terms of the note.
The repayment periods for Stafford Loans vary from 10 to 30 years depending on which repayment plan you choose. When it comes to repayment you can pick a repayment plan that’s right for you. You can get more information about repayment by going to the U.S. Department of Education web site www.studentaid.ed.gov.
If you’re attending school at least half-time, you have a period of time after you graduate, leave school, or drop below half-time status before you must begin repayment. This period of time is called a “grace-period”. The grace period for a Stafford Loans is six months.
Subsidized loan – during the grace period, you don’t have to pay any principal although you will be charged interest for unsubsidized loans taken after July 1, 2012.
Unsubsidized loan – you don’t have to pay any principal, but you will be charged interest. You can either pay interest as you go along or it will be capitalized later.
Usually you’ll pay monthly. Your repayment amount will depend on the size of your debt and the length of your repayment period. If you have a Stafford Loan, the amount you’ll pay also depends on the repayment plan you choose
You should contact the holder of your loan. If you don’t know who holds your loan, you can click here to find out about your federal student loans. The site displays information on loan and/or federal grant amounts, outstanding balances, loan statuses, and disbursements. To use the NSLDS Student Access Web site, you will need your FSA ID to sign in.
There are two options for postponing repayment – Deferment and Forbearance. Receiving deferment or forbearance is not automatic. You must apply for it. You must continue making payments on your loan until your deferment or forbearance has been granted.
A period of time during which no payments are required and interest does not accumulate. In the case of an unsubsidized Stafford Loan you must pay the interest.
Forbearance – loan payments that are reduced or postponed.
If you temporarily can’t meet your repayment schedule but you don’t meet the requirements for a deferment, your lender might grant you forbearance.
You’ll have to provide documentation to the holder of your loan to show why you should be granted forbearance.
The following conditions can qualify you for a deferment Conditions of your Stafford Subsidized and Unsubsidized loans
Not immediately. The subsidized Stafford loan has a grace period of 6 months before the student must begin repaying the loan. When you take a leave of absence you will not have to repay your loan until the grace period is used up. If you use up the grace period, however, when you graduate you will have to begin repaying your loan immediately. It is possible to request an extension to the grace period, but this must be done before the grace period is used up. If your grace period has run out in the middle of your leave of absence, you will have to start making payments on your student loans.
Yes, your school must notify you in writing whenever it credits your account with your loan funds. You may cancel all or a portion of your loan if you inform your school within 14 days after the date your school sends you this notice, or by the first day of the payment period, whichever is later. (Your school can tell you the first day of your payment period.)
No. Parents will only be responsible for your educational loans if you are under 18 and they co-sign your loan. In general you and you alone are responsible for repaying your educational loans. On the other hand, if your parents (or grandparents) want to help pay off your loan, you can have your billing statements sent to their address. Likewise, if your lender or loan servicer provides an electronic payment service, where the monthly payments are automatically deducted from a bank account, your parents can agree to have the payments deducted from their account. But your parents are under no obligation to repay your loans. If they forget to pay the bill on time or decide to cancel the electronic payment agreement, you will be held responsible for the payments, not them.