Federal loans are government-backed financial aid options available to undergraduate students, providing favorable terms and repayment flexibility. Federal student loans are made through the William D. Ford Federal Direct Loan Program. Eligible students borrow directly from the U.S. Department of Education and the University of Iowa administers the loan.

How to Apply

Federal Direct Subsidized Loan

  • Available only to undergraduate students with financial need who are enrolled in at least six credits. Financial need is based on the cost of attendance, student aid index (SAI) calculated from the FAFSA, and other financial aid available.
  • The federal government pays the interest that accrues while the borrower is in an in-school, grace, or deferment status
  • Interest begins to accrue when the borrower enters repayment
  • If eligible, we encourage all students to borrow this loan before borrowing PLUS or private student loans

Federal Direct Unsubsidized Loan

  • Available to undergraduate students enrolled in at least six credits
  • Not based on financial need
  • Interest begins to accrue when the loan is disbursed and will accrue through the life of the loan
  • Interest payments are not required while a student is in school, but it will reduce the total repayment amount
  • We encourage all students to borrow this loan before borrowing PLUS or private student loans

Loan Limits

Annual Federal Loan Limits for Dependent Undergrads
Grade levelSubsidized Annual Maximum EligibilityUnsubsidized Annual Minimum EligibilityCombined Annual Maximum Eligibility
First-Year (00-29 credits)$3,500$2,000$5,500
Second-Year (30-59 credits)$4,500$2,000$6,500
Third- and Fourth-Year (60+ credits)$5,500$2,000$7,500

 

Annual Federal Loan Limits for Independent Undergrads
Grade levelSubsidized Annual Maximum EligibilityUnsubsidized Annual Minimum EligibilityCombined Annual Maximum Eligibility
First-Year (00-29 credits)$3,500$6,000$9,500
Second-Year (30-59 credits)$4,500$6,000$10,500
Third- and Fourth-Year (60+ credits)$5,500$7,000$12,500

6.53 %

2024-25 INTEREST RATE

For loans first disbursed between
7/1/2024 and 6/30/2025

1.057 %

ORIGINATION FEE

For loans first disbursed between
10/1/20 and 9/30/25

What is Interest?

Interest is additional money that you pay to a lender as a cost of borrowing money. Interest is calculated as a percentage of the unpaid principal amount that you borrowed.

Direct Loans are “daily interest” loans. On daily interest loans, interest accrues (adds up) every day.

Learn more about federal interest rates.

An origination fee is a percentage of your loan amount charged by the lender for the processing of your loan. 

Federal student loans have an origination fee; therefore, the amount you may receive as a disbursement may be slightly lower than the amount you accept.