Federal Direct loans are guaranteed student loans for all FAFSA filers and do not require a credit check. Federal Direct Loans are borrowed by the student. Funding for the loan comes from the U.S. Department of Education. Direct loans are divided into two types: subsidized and unsubsidized.
Direct Subsidized Loan
Qualification for the Direct Subsidized Loan is based on financial need as determined by the FAFSA. The federal government pays the interest on this loan during periods of half-time attendance or more, during the six month grace period, and for periods of authorized deferment.
Direct Unsubsidized Loan
Direct Unsubsidized Loans are not based on need, but the amount for which you are eligible may vary depending on the results of the FAFSA and the amount of your other aid. Interest starts accruing from the first disbursement and continues until the loan is paid in full. Interest payments are not required while the student is in school at least half-time, but can be paid by choice without penalty. Interest is capitalized (added to the principal balance) and is included in your monthly payment once one or more of the following occur: enrollment ceases, the grace period expires, and/or a deferment period ends.
Eligibility
To be eligible for Direct Loans, you must meet the following requirements:
- have a completed FAFSA for the current academic year,
- enroll in at least half-time credits (6 credits for undergraduates, 4 credits for graduates (at the 500-level or above)),
- not be in default on previous federal loans,
- not have exceeded lifetime borrowing limits,
- have a completed Master Promissory Note (MPN) on file,
- have completed loan entrance counseling.
Fees
The origination fee for Direct Subsidized and Unsubsidized Loans disbursed prior to October 1, 2020 is 1.059%. The origination fee for loans disbursed on or after October 1, 2020 is 1.057%. Fees are deducted from each disbursement.
Interest Rates
Undergraduate
Direct Subsidized and Unsubsidized Loans
- 2.75% for loans disbursed on or after July 1, 2020
- 3.73% for loans disbursed on or after July 1, 2021
Graduate
Direct Unsubsidized Loans
- 4.30% for loans disbursed on or after July 1, 2020
- 5.28% for loans disbursed on or after July 1, 2021
These rates are fixed until the loan is paid in full or is consolidated. However, these rates will change yearly for any new loans borrowed.
Dependent Student Borrowing Limits
Grade Level | Subsidized Loan Limit | Unsubsidized Loan Limit |
Freshman | $3,500 | $2,000 |
Sophomore | $4,500 | $2,000 |
Junior | $5,500 | $2,000 |
Senior | $5,500 | $2,000 |
Independent Student Borrowing Limits
Grade Level | Subsidized Loan Limit | Unsubsidized Loan Limit |
Freshman | $3,500 | $6,000 |
Sophomore | $4,500 | $6,000 |
Junior | $5,500 | $7,000 |
Senior | $5,500 | $7,000 |
The annual limit for graduate students is $20,500 in unsubsidized Direct Loans.
Independent Student Borrowing Limits
Student Type | Lifetime Subsidized Limit | Total Lifetime Limit |
Dependent Students | $23,000 | $31,000 |
Independent Students | $23,000 | $57,500 |
Graduate Students | N/A | $138,500 |
Default Rate
As of April 2020, EWU graduates’ default rate on Direct Loans is 5.1%. This compares favorably with the 6.8% national rate for graduates of four-year public universities and the 10.1% national average for all higher education institutions.