Federal Direct Subsidized/Unsubsidized Loans are low-interest loans for undergraduate and graduate students who complete a FAFSA.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, resulting in changes to federal student aid programs. Some of these changes went into effect immediately, while others will go into effect next year and beyond.
Eligibility
Student must:
- Have a valid Free Application for Federal Student Aid (FAFSA) on file;
- Must be fully admitted as a degree-seeking student in an undergraduate or graduate program at Indiana State;
- Must be enrolled at least half-time when the loan is expected to be disbursed;
- Must maintain Satisfactory Academic Progress (SAP) standards;
- Must be a U.S. Citizen or eligible non-citizen;
- Must not be in default on an educational loan or owe an overpayment on a federal education grant, or other federal debt, or has made satisfactory arrangements to repay that debt;
How To Apply
- File the Free Application for Federal Student Aid (FAFSA);
- Web-Accept your loans on the Financial Aid Dashboard within your MyISU portal. Exception: Summer semesters require a Summer Aid Request Form;
- First-time borrowers must complete the Master Promissory Note and Entrance Counseling at StudentAid.gov;
- Last day to Web-Accept is Thursday of finals week.
Loan Types
Federal Direct Subsidized Loans
- Collect interest at 0% while the borrower is enrolled at least half-time;
- Collect interest at a fixed APR when the borrower graduates or drops below half-time enrollment;
- Require an origination fee assessed at disbursement for loans depending on when the loan originates;
- Require unmet need as defined by the FAFSA;
- Are only available for undergraduate students.
Federal Direct Unsubsidized Loans:
- Collect interest at a fixed APR;
- Require an origination fee assessed at disbursement for loans depending on when the loan originates;
- Are available for undergraduate and graduate students.
Loan Repayment, Interest Rates and Fees
Information on interest rates and fees may be found here: https://studentaid.gov/understand-aid/types/loans/interest-rates.
Payment may be deferred if the student is enrolled half-time. Learn more about loan deferment and repayment at https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized#subsidized-vs-unsubsidized
Dependent Students
Maximum Annual Federal Loan Limits
| Grade Level | Base Subsidized Amount | Additional Unsubsidized Amount | Annual Maximum | Aggregate Loan Limits |
|---|---|---|---|---|
| Freshman (0-29 hrs) | $3,500 | $2,000 | $5,500 | $31,000 (Maximum $23,000 in Subsidized) |
| Sophomore (30-59 hrs) | $4,500 | $2,000 | $6,500 | |
| Junior (60-89 hrs) | $5,500 | $2,000 | $7,500 | |
| Senior (90+ hrs) | $5,500 | $2,000 | $7,500 |
Dependent students whose parents are denied a Parent PLUS Loan should refer to the Independent Student Chart.
Independent Students
Maximum Annual Federal Loan Limits
| Grade Level | Base Subsidized Amount | Additional Unsubsidized Amount | Annual Maximum | Aggregate Loan Limits |
|---|---|---|---|---|
| Freshman (0-29 hrs) | $3,500 | $6,000 | $9,500 | $57,500 (Maximum $23,000 in Subsidized) |
| Sophomore (30-59 hrs) | $4,500 | $6,000 | $10,500 | |
| Junior (60-89 hrs) | $5,500 | $7,000 | $12,500 | |
| Senior (90+ hrs) | $5,500 | $7,000 | $12,500 | |
| *Graduate | N/A | $20,500 | $20,500 | $100,000 |
| *Professional | N/A | $50,000 | $50,000 | $200,000 |
*Changes to annual and aggregate loan limits for Graduate/Professional students effective July 1, 2026. Read below for details.
Definition of a graduate student and professional student:
The term "professional student" means a student enrolled in a program of study that, upon completion of the program, awards a professional degree as defined under section 668.2 of title 34, Code of Federal Regulations (as in effect on the date of enactment of the OBBBA).
A professional degree is a degree that signifies both completion of the academic requirements for beginning practice in a given profession, and a level of professional skill beyond that normally required for a bachelor’s degree; is generally at the doctoral level, and requires at least six academic years of postsecondary education coursework for completion, including at least two years of postbaccalaureate level coursework; generally requires professional licensure to begin practice; and includes a four-digit program CIP code in the same intermediate group as the following fields: Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., D.P., or Pod.D.), Theology (M.Div., or M.H.L.), and Clinical Psychology (Psy.D. or Ph.D.).
Graduate/Professional Annual & Aggregate Loan Limits
Caps the annual loan limits at $20,500 for graduate students and $50,000 for professional students. The aggregate limit is capped at $100,000 for graduate students and $200,000 for professional students, and does not include amounts borrowed as an undergraduate. (Borrowers who are both graduate and professional students at some point in their educational careers may only borrow up to $200,000 in total for graduate and professional school).
Legacy Provision: If a borrower has a Federal Direct Loan made before July 1, 2026, while enrolled in a program of study, the current loan limits continue to apply for 3 academic years or the remainder of their expected time to credential, whichever is less.
Disbursement of Funds
- Loan funds are applied to student accounts approximately ten days before the start of the semester.
- Half of the amount applied for is disbursed at the start of the fall semester and the other half at the start of the spring semester.
- Funds will first cover direct educational expenses on the student's account.
- Any excess funds are refunded to the student via ACH direct deposit or sent to the student's permanent address.
- Loan amounts will be prorated for undergraduate students graduating in December.
- Borrowers have the right to cancel all or a portion of the loan with no penalty by submitting a Loan Reduction Form within 14 days of disbursement.