Students who borrow loans under the Direct Loan Program are borrowing funds from the Department of Education. There are two kinds of Direct Loans: Subsidized Loans and Unsubsidized Loans. To be eligible for any Direct Loan, the student must complete the FAFSA (Free Application for Federal Student Aid). The student must also be enrolled as a half-time student (6 hours for undergraduates and 5 hours for graduate/professional students). Repayment of the loan starts six months after you stop attending school at least half-time (not counting summers in between terms).

Subsidized Direct Loan

"Subsidized" means that the federal government pays the interest on this loan while you are enrolled in school at least half-time, during the six-month grace period after you stop attending half-time, or during periods of authorized deferment. You must show financial need to receive this type of loan. Check out the federal loan limits to see how much Subsidized Direct Loan you could be eligible for. Graduate and professional students are not eligible for Subsidized Direct Loans.

Unsubsidized Direct Loan

This loan is not based on financial need. "Unsubsidized" means that the federal government does not pay the loan interest at any time. You will be charged interest from the time that the loan is disbursed until it is paid in full. If you allow the interest to accumulate, it will be capitalized. That is, the accrued interest will be added to the principal amount of the loan, and the subsequent interest accruals will be based on the higher principal amount. Check out the federal loan limits to see how much Unsubsidized Direct Loan you could be eligible for.

Applying for Direct Loans

  1. As with other types of financial aid, a student applies for a loan by completing a FAFSA. 
  2. When the Office of Student Financial Aid receives the FAFSA results and any other supporting documents requested, an award is prepared in MyView showing the amount that the student can borrow under the Direct Loan programs.
  3. The student has the opportunity to reduce the amount of aid offered and borrow only what is needed to cover the cost of attendance at UMSL.
  4. Students must complete a Master Promissory Note and entrance counseling before loan funds can be credited to a student's account.

Loan Proration for Graduating Undergraduate Borrowers

If you are scheduled to graduate with your undergraduate degree and will not attend a full academic year, your annual federal loan limits will be prorated.  The amount of your prorated loan will be directly impacted by your hours of enrollment.

For more information regarding Direct Loans visit the U.S. Department of Education.