Federal Direct Loans (Subsidized or Unsubsidized) are funds borrowed from the the U.S. Department of Education (ED) to help eligible students cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school.
Content Breakdown
Types of Direct Loans
Subsidized Loans are available for Undergraduate students only.
These type of Loans are funding that the U.S. Department Of Education (ED) will not charge a student interest on prior to repayment. DOE will pay the interest while the student as long as the student are meeting these standards:
- Enrolled in full time amount (12 units - Undergraduate or Credential students / 8 units - Graduate students)
- 6 month grace period after graduating or withdrawing from classes (Except for loans disbursed between July 1, 2012 and July 1, 2014)
- Any other periods accepted for deferment
These type of Loans are funding that ED will charge a student interest on from the day the funds are disbursed until the Loan is repaid in full. Interest is accrued daily for these Loans.
- The principal loan balance payments are deferred (Delayed), if the student is enrolled in a college or university at least a half-time status. However, students must pay interest with this Loan while they are in school, during any grace periods, or in-school deferment periods.
- Students may choose to have the interest deferred. However, this will result in the deferred interest being added to the principle Loan amount borrowed at the time your repayment begins. This process is called "Loan Capitalization." Having the interest capitalized will mean a higher Loan amount owed than originally borrowed.
Federal Direct Loan Items
Loan Item(s) Processing Timeframe - 2 to 3 weeks after successful completion
Manually accepted Loans will trigger additional items to complete on a student’s To Do List located in their SF State Gateway. For Federal Direct Loans, these are the items students must complete as they will appear on there.
| Item | Description |
|---|---|
| Entrance Loan Counseling for Subsidized & Unsubsidized Loans | A module overview of how the Federal Direct Loan process works - What a Loan is, how interest works, options for repayment, and how to avoid delinquency and default. |
| Master Promissory Note (MPN) for Subsidized & Unsubsidized Loans | A legal document in which a student promises to repay their Loans and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of the Loans. |
NOTE: Feel free to use the demo links provided right below in order to get a preview of how the Loan Counseling and MPN signing will go.
How enrollment affects Loan amounts
Beginning with the 2026-2027 academic year, new federal rules connect your Federal Direct Loan maximum to how many units you take. If you are enrolled full time for the whole year, nothing changes. If you take fewer units, your maximum loan is reduced by about the same proportion.
Your loan limits did not change. What changed is that you now need to be enrolled full time to access all of it.
Three things to know:
- The reduction is calculated on your full eligibility, not on the amount you ask for. If you are eligible for $6,500 and you only want $4,000, we start at $6,500, apply the reduction, and then apply your request.
- Subsidized and unsubsidized loans are reduced separately, each by the same percentage.
- Your enrollment is reviewed at each disbursement. The amount on your offer is built on full-time enrollment, and it can change.
|
Step |
What happens |
|---|---|
|
1 |
We start with the full annual loan limit you are eligible for. |
|
2 |
We divide your units for the year by full-time units for the year, then round to the nearest whole percent. |
|
3 |
We multiply your annual limit by that percentage. |
|
4 |
We split the result across your terms. |
For Undergraduate students, full time at SF State is 12 units a semester (24 units - Fall and Spring)
|
Fall units |
Spring units |
Total for the year |
Your percentage |
|
12 |
12 |
24 |
100% — no reduction |
|
12 |
9 |
21 |
88% |
|
9 |
9 |
18 |
75% |
|
9 |
6 |
15 |
63% |
|
6 |
6 |
12 |
50% |
|
Units for the year |
Percentage |
Subsidized |
Unsubsidized |
Most you may borrow |
|
24 |
100% |
$5,500 |
$2,000 |
$7,500 |
|
21 |
88% |
$4,840 |
$1,760 |
$6,600 |
|
18 |
75% |
$4,125 |
$1,500 |
$5,625 |
|
15 |
63% |
$3,465 |
$1,260 |
$4,725 |
|
12 |
50% |
$2,750 |
$1,000 |
$3,750 |
For Graduate students, full time at SF State is 8 units a semester (16 units - Fall and Spring)
|
Fall units |
Spring units |
Total for the year |
Your percentage |
|
8 |
8 |
16 |
100% — no reduction |
|
8 |
6 |
14 |
88% |
|
6 |
6 |
12 |
75% |
|
6 |
4 |
10 |
63% |
|
4 |
4 |
8 |
50% |
|
Units for the year |
Percentage |
Unsubsidized |
Most you may borrow |
|
16 |
100% |
$20,500 |
$20,500 |
|
14 |
88% |
$20,500 |
$18,040 |
|
12 |
75% |
$20,500 |
$15,375 |
|
10 |
63% |
$20,500 |
$12,915 |
|
8 |
50% |
$20,500 |
$10,250 |
The loan academic year at SF State is Fall and Spring. Summer enrollment is optional, so Summer units are added to your total for the year without raising the full-time target. Taking Summer units can raise your Loan eligibility for the year.
Example: 6 Summer units + 9 Fall units + 6 Spring units = 21 units for the year. 21 out of 24 = 88%, instead of the 63% you would have had without the Summer units.
Federal Direct Loan Limits
| Academic Level |
Annual Limit |
Maximum Subsidized Loan Portion |
|---|---|---|
| First year |
$5,500 |
$3,500 |
| Second year |
$6,500 |
$4,500 |
| Third year and beyond |
$7,500 |
$5,500 |
| Academic Level |
Annual Limit |
Maximum Subsidized Loan Portion |
|---|---|---|
| First year |
$9,500 |
$3,500 |
| Second year |
$10,500 |
$4,500 |
| Third year and beyond |
$12,500 |
$5,500 |
| Dependency Status |
Lifetime Total |
Maximum Subsidized Loan Portion |
|---|---|---|
| Dependent |
$31,000 |
$23,000 |
| Independent |
$57,500 |
$23,000 |
| Graduate Loan Limits |
Amount |
|---|---|
| Direct Unsubsidized (Annual Total) |
$20,500 |
| Direct Unsubsidized (Lifetime Total) |
$100,000 |
Federal Direct Loan Interest Rates
Interest rates and Loan origination fees are for the 2026-2027 school year (Fall 2026, Spring 2027, & Summer 2027).
| Loan Type | Borrower Type | Fixed Interest Rate |
|---|---|---|
| Direct Subsidized Loans and Direct Unsubsidized Loans | Undergraduate | 6.52% |
| Direct Unsubsidized Loans | Graduate or Professional | 8.07% |
| First disbursement Date | Loan Fee |
|---|---|
| On or after 10/1/20 and before 10/1/25 | 1.057% |
| On or after 10/1/19 and before 10/1/20 | 1.059% |
Frequently Asked Questions (FAQS) about Federal Direct Loans
Yes. Beginning with 2026-2027, your maximum Direct Loan is reduced in proportion to how much you are enrolled for the year. See “How your enrollment affects your Loan amount” above. Grants and scholarships are not affected by this rule — they follow their own separate enrollment rules.
Loan offers are built assuming you will be enrolled full time for the full year. Your actual enrollment is reviewed at each disbursement, and if you are enrolled less than full time your maximum is reduced at that point. This is not an error and it is not a penalty. If you already know your enrollment for the year will be less than full time, tell us before your first disbursement so we can build the correct amount from the start.
If your loan covers a single semester rather than a full academic year, a different calculation applies and your maximum for that semester will be a portion of the annual limit rather than the whole thing. Contact our office so we can walk through your specific numbers.
Talk to us first. Dropping units can lower your maximum loan for the year, which can mean a smaller disbursement later in the year or a balance you owe back. We would rather work through it with you before you drop than after.
No. This rule does not apply to Parent PLUS Loans.
No. Those awards have their own separate rules about enrollment.