A Direct Unsubsidized Loan is a federal student loan available to both undergraduate and graduate students that does not require proof of financial need to qualify. These loans have a fixed interest rate and the borrower is responsible for paying the interest from the time the loan is disbursed until it is fully repaid. Unlike subsidized loans, the government does not pay the interest while the student is in school or during grace or deferment periods, so interest accrues during all periods. If the borrower chooses not to pay the interest while in school or during grace periods, it will be added to the loan principal, increasing the total amount to be repaid. Key features of Direct Unsubsidized Loans:
- Available to undergraduate, graduate, and professional students
- No requirement to demonstrate financial need
- Fixed interest rates (6.39% for undergraduates and 7.94% for graduate/professional students for the 2025-2026 academic year)
- Interest accrues from disbursement until loan payoff
- Multiple repayment plans available
- Borrowing limits based on academic year, dependency status, and aggregate limits
- Six-month grace period after dropping below half-time enrollment or completing the program
To apply, students must complete the Free Application for Federal Student Aid (FAFSA) and their school will include the loan amount in the financial aid offer if eligible. In summary, a Direct Unsubsidized Loan is a low-cost, fixed-rate federal student loan that students can borrow regardless of financial need but must pay interest on throughout its life.
