Federal Loans for Students

Federal loans are awarded based on the information provided on the Free Application for Federal Student Aid (FAFSA). Students and parents who choose to participate in federal loan programs are required to have their loan records submitted to the National Student Loan Data System, and those records will be accessible by guarantee agencies, lenders and colleges determined to be authorized users of that data system.

Federal Direct Loan

A Federal Direct Loan (subsidized and unsubsidized) is a fixed interest loan made to students by the U.S. Department of Education. The interest rate on the Federal Direct Subsidized and Unsubsidized loan is 5.05%. This is a fixed interest rate for loans disbursed on or after July 1, 2018 through June 30, 2019 and is effective for the life of the loan. 

Annual borrowing limits vary based on the student's year in school and FAFSA dependency status.

  • Freshman annual loan limit = $5,500 - no more than $3,500 will be subsidized plus additional $4,000 unsubsidized if student is independent
  • Sophomore annual loan limit = $6,500 - no more than $4,500 will be subsidized plus additional $4,000 unsubsidized if student is independent
  • Junior annual loan limit = $7,500 - no more than $5,500 will be subsidized plus additional $5,000 unsubsidized if student is independent
  • Senior annual loan limit = $7,500 - no more than $5,500 will be subsidized plus additional $5,000 unsubsidized if student is independent

There is a federal loan origination fee of 1.066%. This fee is deducted from each disbursement.   

The amount of your Federal Direct Loan that is subsidized depends upon the results of your FAFSA and other financial aid that you may be offered.

Federal Direct Subsidized Loans are need-based with interest paid by the federal government while the student is enrolled at least half-time (minimum of 6 credits). For new Subsidized Direct Loans, disbursed on or after July 1, 2014, the federal government will also pay the interest through the six month grace period.

Federal Direct Loans are based on the cost of attendance (as determined by St. Thomas) minus any other financial aid the student is receiving. Interest on unsubsidized loans accrues prior to repayment. The student has the option to make interest-only payments while they attend college or to defer payment (capitalization rules may apply).

The Federal Direct Loan Program has counseling requirements. If you are a first-time borrower at the University of St. Thomas, you will be required to complete Direct Loan entrance counseling online. Also, upon graduation or withdrawal from the university, you will be required to complete Direct Loan exit counseling. When it is time to complete either entrance or exit counseling, you will be notified by the Financial Aid Office.