Federal Direct Loan Programs for Students

Depending upon what type of student you are, the Department of Education offers three different types of Federal Direct Loans: Subsidized, Unsubsidized, and Graduate PLUS Loans.

Eligibility Requirements

Students need to complete a Free Application for Federal Student Aid (FAFSA) in order to be considered for federal direct loans. Generally, students also must meet the following criteria to be eligible:

• U.S. citizen or permanent resident
• Enrolled at least half-time in a degree-seeking program (6 credits for undergraduate, 4.5 for graduate/professional)
• Not currently in default of an educational loan(s)

The specific loan program eligibility is listed below for undergraduate and graduate students. 

Undergraduate Students

Undergraduate students may be eligible for two different types of direct loans: 

• Subsidized Loan – The Department of Education pays the interest on the loan during the student's in-school deferment period; interest does not start to accrue on the loan until the student graduates, drops below part-time status, or withdraws from the University.
• Unsubsidized Loan – Interest starts to accrue on the loan once it disburses to the student's account.

Annual total amounts of direct loans are determined by the student's grade level and dependency status. There is an annual maximum of how much of a student's annual direct loan eligibility can be provided as a Subsidized loan. This is determined based on the student's financial need. The current limits are listed below.

Note: The total annual amount limit may not exceed Drexel's cost of attendance minus other financial assistance you receive.

Graduate and Professional Students

  Students in graduate or professional programs are eligible for two types of direct loans:

• Unsubsidized Loan – Interest starts to accrue on the loan after it disburses to the student's account.
• Graduate PLUS Loan - For legacy borrowers, this is a credit-based loan that requires a separate application in addition to completing the FAFSA. Students can apply online at studentaid.gov.

Based on the One, Big, Beautiful Bill Act, signed into law on July 4, 2025, there are upcoming changes to federal graduate and professional student loan programs. Even if you are not currently borrowing, these updates may affect future financing options during your program. These changes take effect July 1, 2026, and will affect the 2026–2027 academic year. Visit our federal graduate student loan program updates page for full details on what is changing, who is affected, and how Drexel is supporting current students.

Annual amounts of the Unsubsidized loan are dependent upon the type of and year in a program. For legacy borrowers, Graduate PLUS Loans are limited to the student's cost of attendance minus all financial aid awards and resources being received.

Graduate vs. Professional Degree Programs

How much can graduate students borrow under the new rules?

Students in graduate programs may borrow:

• Up to $20,500 per year in Federal Direct Unsubsidized Loans
• Up to $100,000 total (lifetime) in federal loans
• Up to $257,500 aggregate lifetime cap (all federal loans, including undergraduate, excluding Parent PLUS loans)

How much can professional students borrow?

Students in professional degree programs may borrow:

• Up to $50,000 per year in Federal Direct Unsubsidized Loans
• Up to $200,000 total (lifetime) in federal loans
• Up to $257,500 aggregate lifetime cap (all federal loans, including undergraduate, excluding Parent PLUS loans)

Note: The total annual amount limit may not exceed Drexel's cost of attendance minus other financial assistance you receive.

Interest Rates and Fees

Interest Rates

Interest rates for Federal Direct loans are calculated on a year-by-year basis using the 10-Year Treasury Note index rate in combination with an add-on amount determined by Congress. Each loan has a rate cap should the Treasury Note index increase in subsequent years.

View information about interest rates for federal direct loans at studentaid.gov.

Origination Fees 

Most federal student loans have fees that are a percentage of the loan amount. View more information about Origination Fees.

How to Apply for Federal Direct Loans

Students interested in federal loans should complete the following steps:

• Complete a Free Application for Federal Student Aid (FAFSA)
• Complete any outstanding requirements, as indicated by the Office of Financial Aid. Once your financial aid package is completed, you will see the federal loans you are eligible to receive (Subsidized and Unsubsidized only).
• You will be required to accept or decline any loan funding offered to you via DrexelOne.
• First-time borrowers will also need to complete loan entrance counseling and a master promissory note.

For legacy borrowers, graduate or professional students who are interested in supplementing their financial aid package with a Graduate PLUS Loan should take the following steps:

• Review your financial aid award summary and personal budget to determine how much you will need (only borrow the amount you actually will use to minimize your overall loan debt).
• Apply online at studentaid.gov. Remember: The Graduate PLUS Loan is based on satisfactory credit criteria established by the Department of Education. 
• You will receive an instant decision regarding your application. 
• Follow the next steps supplied to you by the Department of Education. Drexel will be notified of your loan approval and add it to your financial aid package once you have completed all steps.

Please note: Federal loans disburse evenly over the course of one academic year based on your plan of study. See our Financial Aid Distribution page for more details.

Schedule of Reductions (SOR)

Beginning July 1, 2026, Federal Direct Loans will be prorated based on the number of credits in which a student is enrolled/academically engaged. This process is called the Schedule of Reductions (SOR).

Similar to the Pell grant, students are offered the maximum amount of Federal Direct Loan funding per year based on full-time enrollment.

See below for an enrollment guide detailing the number of credits in which a student must be enrolled/academically engaged to be considered full-time for financial aid purposes.

With the new Federal Direct Loan proration requirement, full-time students will receive the full amount of their annual loan offer. If a student is enrolled less than full-time, they will not be eligible to receive the full-time amount of loans offered to them. Instead, the university will calculate the amount of loan funding the student is eligible to receive based on the number of credits in which they are enrolled.

The formula we will use to determine how much of a federal direct loan a student may receive in a term based on the number of credits in which they are enrolled is below.

Credit Hours Enrolled / Credit Hours required to be full time in an academic year = SOR*

Then, the University will multiply the SOR by the student's annual subsidized and unsubsidized loan limits to determine their prorated loan amount(s). This process is done separately for subsidized and unsubsidized loans if the student is eligible for both types of loans.

Annual Loan Limit x SOR = SOR Loan Limit

At minimum, students need to be enrolled at least half-time to receive any Federal Direct Loan funding.

See below for an enrollment guide detailing the number of credits in which a student must be enrolled/academically engaged to be considered half-time for financial aid purposes.