Federal Subsidized and Unsubsidized Direct Student Loans (FDSL)
Overview
Subsidized and unsubsidized loans are federal student loans that assist students in paying tuition, fees, and related expenses.
Comparison of Federal Direct Loans
| DIRECT SUBSIDIZED LOAN | DIRECT UNSUBSIDIZED LOAN |
|---|---|
| Undergraduate students demonstrating financial need | Undergraduate and graduate students do not need to prove financial need |
| Institution determines amount that can be borrowed based on Cost of Attendance and other aid received | Institution determines amount that can be borrowed based on Cost of Attendance and Student Aid Index (SAI) |
| U.S. Department of Education pays the interest on a Direct Subsidized Loan while you are in school at least half-time | The U.S. Department of Education does not pay the interest on a Direct Unsubsidized Loan while you are in school at least half-time |
| You will not pay interest for six months after you graduate or during deferment | Interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan) if you do not pay while attending, during deferment, or forbearance |
Interest Rates for Direct Loans
| loan type | Interest rates loans originated july 1,2025 – june 30, 2026 |
|---|---|
| Undergraduate Direct Subsidized & Unsubsidized Loans | 6.39% |
| Graduate Direct Unsubsidized Loans | 7.94% |
There is a loan fee on all Direct Subsidized and Direct Unsubsidized. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement. The percentage varies depending on when the loan is first disbursed, as shown in the chart below.
Origination Fees by Loan Type
| loan type | DISBURSED ON OR AFTER 10/1/20 |
|---|---|
| Direct Subsidized and Unsubsidized Loans | 1.057% |
The Department of Education deducts the origination fee before you receive any loan money, so the loan amount you receive will be less than the amount you will have to repay.
Undergraduate Annual and Aggregate Limits for Direct Loans
| Student Type | 1st Year | 2nd Year | 3rd Year+ | Aggregate Limit |
| Dependent Undergraduate | $5,500-No more than $3,500 of this amount may be in subsidized loans. | $6,500- No more than $4,500 of this amount may be in subsidized loans. | $7,500- No more than $5,500 of this amount may be in subsidized loans. | $31,000 |
| Independent Undergraduate | $9,500- No more than $3,500 of this amount may be in subsidized loans. | $10,500- No more than $4,500 of this amount may be in subsidized loans. | $12,500- No more than $5,500 of this amount may be in subsidized loans. | $57,500 |
Graduate Annual and Aggregate Limits for Direct Loans
| Loan Type | CURRENT LOAN LIMIT (Pre-July 1, 2026) | REVISED LOAN LIMIT (July 1, 2026 Forward) |
| Federal Direct Unsubsidized Loan | $20,500 annual limit | $20,500 annual limit |
| Graduate Aggregate Limit | $138,500 (Includes any loans borrowed as an undergraduate) | $100,000 (Excludes any loans borrowed as an undergraduate) |
Schedule of Reduction for Less than Full-time Students
A new federal law is changing how Federal Direct Loans are disbursed for less than full-time enrollment. Beginning in Fall 2026, your student loans will be prorated each semester based on your enrollment level. This means the number of credit hours you take each semester will directly affect how much loan funding you can receive.
What’s changing?
Previously, students enrolled less than full-time could often receive up to their full annual loan amount based on their classification. Under the new law, your loan eligibility will now be calculated each semester based on your enrollment intensity (how many credits you take).
How Loan Proration Works (Per Semester)
Note: The amounts below reflect one semester of eligibility, not the full academic year.
Dependent Undergraduate Students (students who must include parent information on the FAFSA)
| Grade Level | Annual Limit | 12 hrs (100%) | 9 hrs (75%) | 6 hrs (50%) |
|---|---|---|---|---|
| Freshman | $5,500 | $2,750 | $2,063 | $1,375 |
| Sophomore | $6,500 | $3,250 | $2,438 | $1,625 |
| Junior | $7,500 | $3,750 | $2,813 | $1,875 |
| Senior | $7,500 | $3,750 | $2,813 | $1,875 |
Independent Undergraduate Students (students who do not have to include parent information on the FAFSA)
| Grade Level | Annual Limit | 12 hrs (100%) | 9 hrs (75%) | 6 hrs (50%) |
|---|---|---|---|---|
| Freshman | $9,500 | $4,750 | $3,563 | $2,375 |
| Sophomore | $10,500 | $5,250 | $3,938 | $2,625 |
| Junior | $12,500 | $6,250 | $4,688 | $3,125 |
| Senior | $12,500 | $6,250 | $4,688 | $3,125 |
Graduate Students
| Grade Level | Annual Limit | 9 hrs (100%) | 6 hrs (66%) |
|---|---|---|---|
| Graduate | $20,500 | $10,250 | $6,833 |
What This Means For You
- Your loan amount each semester will depend on how many credit hours you take
- Taking fewer than 12 hours will reduce your loan eligibility
- Dropping classes before your loan is disbursed may lower your loan amount
- Increasing your enrollment before disbursement may increase your loan amount
- Dropping classes after your loan is disbursed may lower your loan amount for the next term
Students enrolled part-time may receive less loan funding than in previous years, which could result in:
- A remaining balance owed to the school
- The need to enroll in or adjust a payment plan
- Exploring additional funding options
Federal Direct Subsidized and Unsubsidized Loan Repayment
Repayment can be managed on the website of your loan servicer, which will be assigned to you by the U.S. Department of Education. While the interest rate on the loan is fixed, interest starts accruing on the loan at the time of disbursement to Tarleton State University. Payments can be deferred until after graduation, as long as you are enrolled at least half-time. Accrued interest can either be paid quarterly while you are in school or capitalized (added) to the loan when you enter repayment. You will accrue future interest based on the principle balance while in repayment. The U.S. Department of Education has a Loan Repayment Estimator you can use to help estimate your loan repayment options.
Additional Steps for First-time Borrowers
The Master Promissory Note (MPN) is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s). Unless your school does not allow more than one loan to be made under the same MPN, you can borrow additional Direct Loans on a single MPN for up to 10 years.
Entrance Counseling is a tool to ensure you understand your obligation to repay the loan and agree to the terms of the loan.
You will be notified through myGateway to complete the MPN and Entrance Counseling.
Additional Information
If you have other questions about interest, please email the Office of Financial Aid, or call us at 254-968-9070.