Federal Direct Loans

There are two types of Federal Direct Loans:

  • Federal Direct Subsidized Student Loans – These are need-based loans. The federal government pays the interest that accrues on the loan while you are enrolled in at least 6 credits and you won’t be charged any interest during your six-month grace period. Graduate students are not eligible for subsidized loan funds.
  • Federal Direct Unsubsidized Student Loans – These are non-need based loans, and are available regardless of financial need; interest begins to accrue as soon as you receive your loan. Students may choose to pay the interest that accumulates or have it capitalized – meaning, the interest will be added to the principal amount of your loan and additional interest will be based upon the higher amount. Paying the interest as it accumulates will reduce the amount of interest that must be repaid.

Beginning July 1, 2020, the interest rate is 2.75% for subsidized and unsubsidized loans for undergraduate students.

The interest rate is 4.30% for unsubsidized loans for graduate/professional students.

Loans with a first disbursement on or after Oct. 1, 2019 and before Oct. 1, 2020 will have a loan origination fee of 1.059%. You will pay back 100% of what you borrow (plus interest); however, only 98.941% of the gross loan will be disbursed to the account. Loans disbursed on or after October 1, 2020 and before October 1, 2021 will have a loan origination fee of 1.057%.

Repayment of both types of loans begins six months after graduation or if you fall below 6 credits.   

A federal loan servicer will be assigned by the Department of Education, and will communicate directly with students via email or regular mail. Many servicers will give you the option to choose how you prefer to be contacted. Contact your loan servicer for details.

NOTE:  Work with your servicer to select a repayment plan. A borrower may prepay all or any part of the unpaid balance on the loans at any time without penalty. Read more about student loan repayment

Consolidated appropriations act, 2012

Temporarily eliminates the interest subsidy on Direct Subsidized Loans during the six month grace period:

  • Applies to new Direct Stafford Loans for which the first disbursement is made on or after July 1, 2012, and before July 1, 2014.
  • Accrued grace period interest not paid will be capitalized.
  • Borrower could have some loans with interest subsidy and some without when in grace period.

How to Apply

The Free Application for Federal Student Aid (FAFSA) is the standard application used to apply for any type of financial aid including loans. Once we receive your FAFSA we will send you a financial aid offer letter which will describe your aid eligibility. Students must be enrolled in at least 6 credits, and complete all loan requirements within the enrollment period to receive federal loan funds. 

Accepting your loans

Once you have received and reviewed your award offer you must accept or decline your loan(s) via BU BRAIN Self Service, Financial Aid tab. Students have the ability to refuse all or borrow less than the maximum student loan amount offered. Select "Award" and appropriate aid year. Go to "Award Overview" to VIEW and/or PRINT your award offer.

 *First-time borrowers must complete a Master Promissory Note (MPN) and Entrance Counseling online before the loan can credit the student's account and disburse.

Undergraduate Student Annual Loan Limit

Undergraduate student loan limits range from $5,500 to $12,500 per year depending on certain factors, including the student's year in college and other aid received.

Dependent Students Maximum Eligibility  
Freshman $5,500 If eligible, up to $3,500 may be subsidized.
Sophomore $6,500 If eligible, up to $4,500 may be subsidized.
Junior or Senior $7,500 If eligible, up to $5,500 may be subsidized.
Independent Students Maximum Eligibility  
Freshman $9,500 If eligible, up to $3,500 may be subsidized.
Sophomore $10,500 If eligible, up to $4,500 may be subsidized.
Junior or Senior $12,500 If eligible, up to $5,500 may be subsidized.

Graduate Student Annual Loan Limit

Graduate students can borrow up to $20,500 in unsubsidized loan (if eligible) each aid year.  Students enrolled in the Doctor of Pharmacy or PhD in Psychology, Clinical Science programs can borrow up to $33,000 in unsubsidized loan funding (if eligible) each aid year.  

Students have the ability to refuse all or borrow less than the maximum student loan amount offered. If needed, graduate students can also apply for additional funding under the Graduate PLUS Loan program.  Credit approval is required. 

Total Aggregate Loan Limit

An aggregate loan limit is the total amount of money a student is allowed to borrow during his/her undergraduate or graduate education.

  • Dependent Undergraduate Student: $31,000 (no more than $23,000 can be subsidized)
  • Independent Undergraduate Student: $57,500 (no more than $23,000 can be subsidized)
  • Graduate Student: $138,500 (includes undergraduate and graduate borrowing)
  • Doctor of Pharmacy and PhD in Psychology, Clinical Science Student: $224,000 (includes undergraduate and graduate borrowing)

Subsidized Usage Limit Applies (SULA) = 150% Federal Direct Subsidized Loan Limit

  •  In addition to the aggregate loan limit, which determines the maximum amount of Federal Direct Subsidized Loans a student can borrow over the course of their education, there is also a time limit for how long a student is eligible to borrow these loans. The Department of Education has stipulated that a student can only receive Federal Subsidized Loans for a period up to 150% of the length of the borrower's educational program. For a 4-year Bachelor's degree, a student can receive Federal Subsidized Loans for up to six years. If a student does not complete their program within six years, the student will not be eligible to receive any future Federal Direct Subsidized Loans (although the student may still be eligible for Federal Direct Unsubsidized Loans). The student will also lose the interest subsidy on their existing Federal Direct Subsidized Loans, which means that interest will begin to accrue on those loans.
  • If a student is borrowing Federal Direct Subsidized Loans while attending less than full-time, the SULA period will be longer.
  • The SULA regulations do not apply to students who began borrowing federal loans prior to July 1, 2013.