Federal Direct Loan (Undergraduate)
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Although Penn does not include loans in dependent student’s financial aid packages, this loan can be used by U.S. students to assist with their Expected Family Contribution or to replace their work-study award. Because this is a student loan, repayment is deferred until six months after the student completes their education or ceases to be enrolled at least half-time.
The Federal Direct Subsidized Loan is need-based and offers the most favorable terms for eligible students. Maximum borrowing amounts are different depending on a student’s grade level and status as a dependent or independent student. See chart below. A subsidized loan means the federal government covers your interest payments while you are enrolled at least half-time.
The Federal Direct Unsubsidized Loan is not need-based and can be used to replace the Expected Family Contribution up to the Cost of Attendance. Interest begins to accrue on this loan after the first disbursement.
How to Apply
You can apply for a Federal Direct Loan by completing the FAFSA and formally requesting the loan within the Penn Loan System. Students are required to sign a Master Promissory Note and complete entrance counseling. Both requirements must be completed at www.studentaid.gov.
Note for LPS and Accelerated Nursing Students: Penn will pre-certify you if you received a Federal Direct Loan last year, so you only need to file a FAFSA.
Loan counseling is a required online tool to help you understand your rights and responsibilities as a Direct Loan borrower. You must complete this requirement before you can receive your Direct Loan. In most cases, you will only need to complete entrance counseling once during your degree.
You can complete your entrance counseling requirement at www.studentaid.gov. Select your student population and log in with your FSA ID. Penn will be notified of your completion within 3-5 business days.
Rates, Fees & Repayment
The interest rate for these loans is 3.73% for loans disbursed between July 1, 2021 and June 30, 2022. Origination fees are currently 1.057%.
Consolidation, deferment (for graduate school), public service loan forgiveness, and income-based repayment options are available for this loan program.
|Annual Maximums for Dependent Students||Annual Maximums for Independent Students||Maximum Amount that can be subsidized|
Note: Your total annual borrowing limit may not exceed Penn’s cost of attendance less other financial assistance you receive.