What is the difference between a Direct Subsidized and a Direct Unsubsidized Stafford Loan?

The Federal Government pays the interest for Direct Subsidized Loans while the student is in college or while the loan is in deferment. Interest begins accruing for Direct Unsubsidized Loans as soon as the loan is taken out.

How much can I borrow?

For subsidized loans, the maximum is $3,500 for freshmen, $4,500 for sophomores, and $5,500 for juniors and seniors. Undergraduates who are not eligible for Direct Subsidized Loans may borrow an identical amount in a Direct Unsubsidized Loan. Undergraduates may also borrow an additional $2,000 in a Direct Unsubsidized Loan after they have exhausted their initial subsidized/unsubsidized eligibility. Graduate students may borrow a Direct Unsubsidized Loan for up to $20,500.

Undergraduates may not borrow subsidized loans in excess of their financial need (the difference between the cost of attending Drew and our estimate of your contribution to you or your child’s education). No student may borrow unsubsidized loans in excess of his/her cost of attendance.

What are the interest rates?

2014-2015 Direct Loan Interest Rates and Fees
(for loans with a first disbursement date on or after October 1, 2014)

Direct Loan Program Interest Rate Fee*
Subsidized Federal Direct Loan
(for undergraduates only)
4.66% 1.073%
Unsubsidized Federal Direct Loan
(undergraduate students)
4.66% 1.073%
Unsubsidized Federal Direct Loan
(graduate students)
6.21% 1.073%

*Direct Loan Fee: The Subsidized and Unsubsidized Federal Direct Stafford Loans have a 1.073% origination fee which will be deducted from the gross amount of the loan borrowed.

When are the payments due?

Repayment begins six months after leaving college, payments are made monthly, and you have ten years to repay the loan.

How do I apply?

  • Fill out a FAFSA and indicate you are interested in a Direct Student Loan. Your FAFSA is your loan application.
  • Once Drew receives your FAFSA and any other required financial aid forms, your eligibility for Direct loan funds will be determined.
  • You will be sent an email indicating that your Financial Aid Awards can be viewed on your Treehouse Account. Log on and accept your awards.
  • Once you have accepted your awards, a link to studentloans.gov will appear on your Treehouse Account. This website will provide you with instructions on how to electronically fill out your Master Promissory Note and Entrance Interview. Students only need to fill this form out once in ten years, so they will not be required to complete it again while at Drew. After you have filled out a Master Promissory Note, in subsequent years, you only need to continue filling out the FAFSA form and accepting your awards on Treehouse to receive Federal Direct loan funds.
  • The Department of Education will transmit your funds electronically to Drew’s business office, who will then credit the funds to your account.
  • If you have a credit on your account after receiving loan funds, and are not on any payment plan, the Business Office can usually mail you a check for the credit on your account 7-10 days after you call them with your request (973-408-3114).