A Direct Loan offer gives you a borrowing option for education expenses. Review the loan type, the amount you need, what will actually reach your school account and how repayment will work. Your school's financial aid office determines the amount available to you within current program rules.
This guide covers US federal Direct Loans. Begin with the FAFSA application and your school's written aid offer.
Identify the borrower and who pays interest
On a narrow screen, focus the table and use the arrow keys to scroll.
| Loan | Who borrows | Interest responsibility |
|---|---|---|
| Direct Subsidized | Eligible undergraduate with financial need. | The government pays interest during qualifying in-school, grace and deferment periods. |
| Direct Unsubsidized | Eligible undergraduate, graduate or professional student. | The borrower is responsible for interest during all periods, including school. |
| Direct PLUS for parents | An eligible parent of a dependent undergraduate. | The parent owes the loan; interest accrues during all periods. |
The subsidized and unsubsidized loan guide explains eligibility, including at least half-time enrollment, and current limits. For parent borrowing, read the separate Parent PLUS rules and repayment options. Keep student and parent obligations on separate budget lines.
Calculate the remaining funding gap
List the costs for the period covered by the offer: billed charges plus realistic books, transportation and living expenses. Subtract grants, scholarships and cash you can commit. Keep future earnings separate until you know when they will be available. Compare the result with disbursement dates; a term budget also needs enough cash at the time each bill is due.
Write down what expense each borrowed dollar will cover. Review optional costs and the possibility of a smaller gap before choosing an amount. Repeat the budget for later years so one affordable year does not conceal a much larger total borrowing plan.
Check the rules for this loan and disbursement date
Borrowing limits and program availability changed beginning July 1, 2026. Graduate PLUS borrowing is now limited to borrowers qualifying for a transition exception. Limits also depend on student level, enrollment, prior borrowing and applicable exceptions. Check current Federal Student Aid program changes with the financial aid office before relying on an older chart.
Use the official interest-rate and fee tables for the loan type and first disbursement date. Record the fixed interest rate, fee percentage, gross loan amount and expected net disbursements. A fee withheld from proceeds reduces available cash while the full principal still has to be repaid.
Ask the school to confirm these five items in your offer: loan type, approved amount, period covered, expected disbursement dates and the rule used to determine your limit. Resolve any mismatch before accepting.
Complete acceptance and track the money
Follow your school's acceptance process. First-time student borrowers generally complete entrance counseling and a Master Promissory Note. Read the repayment obligation and cancellation procedures before signing. The Direct Loan guide describes these steps and how funds are applied to school charges.
- Save the accepted amount and loan documents in a private folder.
- Compare the school account's actual loan credit with the expected net amount.
- Check whether any remaining funds are available for other education expenses and when they will arrive.
- If you borrowed too much or plans changed, ask the school promptly about reducing or returning funds within the applicable time limits.
A refund of remaining loan funds still represents borrowed money. Give it a place in the term's expense plan.
Prepare before the first bill
Find your assigned servicer through StudentAid.gov, keep contact details current and record the first due date. Direct Subsidized and Unsubsidized Loans generally have a six-month grace period after leaving school or dropping below half-time. Parent PLUS has different payment and deferment rules. See federal repayment guidance.
Available plans depend on loan type and when loans were received. Use the Federal Student Aid Repayment Calculator to compare eligible plans, estimated payments, total paid and time to repayment. Then confirm the actual terms with the servicer. Review affordability against expected take-home income and essential expenses.
If a payment becomes difficult, contact the servicer before missing it. If you are considering combining existing loans, read the consolidation decision guide first: creating a new loan can change plan eligibility and benefits.
US guidance reviewed October 6, 2026. Explore loans, credit and debt guides.