Federal Direct Subsidized and Unsubsidized Loans

Undergraduate students enrolled half-time or higher are eligible for both Federal Direct Subsidized and Unsubsidized loans. Graduate and professional students are only eligible for Federal Direct Unsubsidized loans and GradPLUS loans. The Direct Subsidized and Unsubsidized loans are fixed interest rate loans with the same repayment programs and include options for deferment and forbearance, albeit the interest on the loans can be treated differently during in-school and grace periods.

Basic Eligibility

You must complete Free Application for Federal Student Aid (FAFSA) and meet the basic eligibility criteria explained there.  Then, once you have accepted Direct Loans you must:


Difference Between Subsidized & Unsubsidized Loans

The subsidized loan is considered a need-based loan which means it is only awarded to those students who show financial need on the FAFSA. The unsubsidized loan is available to anyone whose other financial aid doesn't meet the Cost of Attendance. Each loan has a six month grace period after the student graduates, withdraws, or is enrolled less than half-time.


Loan Fees

 Direct Subsidized and Unsubsidized loans that are disbursement on or after October 1, 2015 will have a 1.068% origination fee taken out of the loan funds before disbursement.   


Loans that are disbursement on or after October 1, 2016 will have a 1.069% origination fee taken out of the loan funds before disbursement.   



Interest Rates


Currently, the interest rate for Undergraduates (subsidized and unsubsidized loans) is fixed at 3.76%.


The interest rate for Graduate and Professional students (unsubsidized loans) is fixed at 5.31%.


Annual and Aggregate Loan Limits         


Dependent Undergraduate Annual Loan Limits
Grade Level Subsidized Unsubsidized Combined
Freshman 3,500 2,000 5,500
Sophomore 4,500 2,000 6,500
Junior & Senior 5,500 2,000 7,500



Independent Undergraduate Annual Loan Limits
Grade Level Subsidized Unsubsidized Combined
Freshman 3,500 6,000 9,500
Sophomore 4,500 6,000 10,500
Junior & Senior 5,500 7,000 12,500


Graduate & Professional Annual Loan Limits
Grade Level Unsubsidized
Graduate  20,500
Medical Year 1 43,833
Year 2, 3, 4 47,167
Veterinary Year 1, 2, 3 40,500
Year 4 47,167
Doctorate of Pharmacy  33,000
Master of Public Health (MPH) 33,000


  • An undergraduate student's dependency status is determined by the FAFSA and federal guidelines.
  • If the borrower is not eligible for the maximum subsidized loan, they may be offered the difference as unsubsidized loans.
  • Aggregate loan limits are the lifetime maximum loan amounts a borrower is eligible for in their academic career. A borrower's aggregate total is the total off all Direct Loans the student has borrowed.
  • Seniors who graduate in less than a full academic year cannot receive the full senior maximum in Federal Direct Loans ($7,500 for dependent students, $12,500 for independent students). UW Madison is required to prorate loans for seniors who graduate after attending only one term of an academic year. For example, the 2015-2016 school year is made up of three terms; summer 2015, fall 2015 and spring 2016. If a senior graduates after attending only ONE of those terms their Direct Loans must be prorated down to reflect the actual number of credits taken during their final term. If a student is enrolled for summer AND another term the loans do not need to be prorated.
  • Effective July 1, 2013, first-time* Direct Loan borrowers are limited in the amount of time they can receive Direct Subsidized Loans.  Borrowers may receive Direct Subsidized Loans for no more than 150% of the length of the student’s current academic program (ex. 6 years for a 4-year program). Once a student has reached 150% time limit, they will not be eligible for any further subsidized loans.  If they continue to enroll, they will lose the interest subsidy on the subsidized loans they borrowed in the past. Students who have reached the 150% limit will remain eligible for Direct Unsubsidized Loans. The time limit for borrowing subsidized loans will be adjusted to reflect part time attendance and attendance for only one semester.

              * First-time borrowers are students with no outstanding federal loan balance as of July 1, 2013


 Grade Level  Lifetime Aggregate Limits
 Subsidized  Unsubsidized  Combined
 Dependent Undergrad   23,000  8,000  31,000
 Independent Undergrad   23,000  34,500  57,500
 Graduate  65,500*  73,000  138,500*
 Medical, Veterinary   65,500*  158,500  224,000*
 Medical, Pharmacy & MPH   65,500*  158,500  224,000*

 *Graduate aggregate limits include undergraduate loans borrowed.

Deferment and Forbearance

Borrowers can get an in-school deferment on their Direct Loans whenever they are enrolled halftime or more.  Other types of deferments include partial financial hardship or unemployment deferment.  Deferments are typically given for 12 month periods of time.  Interest will not accrue on subsidized loans during deferments.  Contact your loan servicer for the appropriate forms.

Forbearance means a temporary lowering of payments for a certain amount of time, usually for several months.  A forbearance is given due to unforeseen financial, health or military circumstances.  Interest will continue to accrue on all loans during forbearances, and accrued interest may be capitalized (added to your principle) after a forbearance ends.  Contact your loan servicer for the appropriate forms.

Entrance & Exit Counseling

To learn more about loan counseling click here.

Summer Term Borrowing

If a summer tuition balance exists when the student's enrollment is ending, the financial aid office will accept any offered loans for the amount of the balance. A notification will be sent to the borrower. Due to the shortened summer period of enrollment, students may forget to accept their loans by the end of their summer class. Once the summer class is over, the loan can no longer be accepted and processed for the student. If the borrower does not want the loan, please contact the Federal Direct & Private Loan Office at 608-262-4987 or email directloans@finaid.wisc.edu and the loan will be cancelled.