Understanding Direct Unsubsidized Loans

A Federal Direct Unsubsidized Loan is a federal student loan available to eligible undergraduate, graduate and professional students.

Unlike a Direct Subsidized Loan, an unsubsidized loan is not based on financial need. You are also responsible for the interest that accrues from the time the loan is first disbursed, including while you are in school.

Because interest begins accumulating right away, it is important to borrow carefully and understand how repayment works before accepting the loan.
 

Direct Unsubsidized Loan Basics

Direct Unsubsidized Loans can help eligible students pay for college expenses, including tuition, fees, housing, meals, books, supplies and other education-related costs.

Your eligibility is determined by the information you provide on the Free Application for Federal Student Aid (FAFSA). If you are eligible, the loan may appear in your financial aid offer.

Your eligibility for a Direct Unsubsidized Loan depends on a variety of factors:  

• Your FAFSA information
• Your year in school
• Your enrollment status
• Your cost of attendance
• Other financial aid you receive
• Your annual and lifetime federal loan limits

Note: A Direct Unsubsidized Loan is still a loan. You are responsible for repaying the amount you borrow, plus interest and any fees.
 

Who Is Eligible for a Direct Unsubsidized Loan?

Direct Unsubsidized Loans are available to eligible undergraduate, graduate and professional students.

You do not need to demonstrate financial need to qualify, but you must still complete the FAFSA so UAlbany can determine your federal aid eligibility.

Undergraduate students must be enrolled in at least six credits to be eligible for federal Direct Loans. In addition to meeting basic eligibility requirements graduate students must be registered at least half-time, or generally at least 4.5 credits, in a degree seeking program to receive a Federal Direct Loan Unsubsidized.  

Note: Graduate and professional students are not eligible for Direct Subsidized Loans, but they may be eligible for Direct Unsubsidized Loans.
 

Direct Unsubsidized Loans vs. Direct Subsidized Loans

The main difference between a Direct Subsidized Loan and a Direct Unsubsidized Loan is how interest is handled.

With a Direct Subsidized Loan, the federal government pays the interest while you are enrolled at least half-time, during your six-month grace period and during deferment.

With a Direct Unsubsidized Loan, interest starts accumulating when the loan is first disbursed. You are responsible for that interest while you are in school, during your grace period and during periods of deferment or forbearance.

Note: If you are offered both subsidized and unsubsidized loans, consider using the subsidized loan first because it may cost less over time.
 

How Much Can I Borrow?

The amount you can borrow depends on your year in school, dependency status, cost of attendance, other financial aid, and federal annual and lifetime borrowing limits.

For loan purposes, UAlbany determines undergraduate grade level based on the number of credits you have completed:

• A freshman has completed less than 24 credits.
• A sophomore has completed 24 to 55 credits.
• A junior has completed 56 to 87 credits.
• A senior has completed 88 or more credits.

Students who progress to the next grade level after earning credits in a prior semester may be eligible for a loan increase for the academic year. If you believe you are eligible for a loan increase based on grade level progression, submit a ticket through the Financial Aid Self-Service Portal.

Note: You are not required to borrow the full amount offered. Borrow only what you need.
 

What Are the Interest Rates and Fees?

Federal Direct Loans have fixed interest rates and origination fees.

For loans first disbursed on or after July 1, 2026, and before July 1, 2027, the fixed interest rate is 6.52% for Direct Subsidized and Unsubsidized Loans for undergraduate students and 8.07% for Direct Unsubsidized Loans for graduate and professional students.

Direct Subsidized Loans and Direct Unsubsidized Loans also have a loan fee. For loans first disbursed on or after Oct. 1, 2020, and before Oct. 1, 2027, the fee is 1.057%. The fee is deducted from the loan before the funds are disbursed.

Note: Interest rates and loan fees are set by the federal government and may change for new loans. Visit the Federal Student Aid website for current rates and fees.
 

How Do I Apply for a Direct Unsubsidized Loan?

Complete the FAFSA for the academic year you plan to attend UAlbany and enter UAlbany’s Federal School Code: 002835.

UAlbany will review your FAFSA information, enrollment and other aid to determine whether a Direct Unsubsidized Loan can be included in your financial aid offer.

After your FAFSA is processed, check your MyUAlbany portal for Tasks. Financial aid processing cannot continue until required items are completed.

Note: Graduate students can complete the FAFSA before being admitted to UAlbany, but aid cannot be finalized until admission and enrollment requirements are met. Graduate students only need to report their income and, if applicable, their spouse’s income on the FAFSA.
 

How Will I Know If I Received a Direct Unsubsidized Loan?

If you are eligible, the loan will appear in your financial aid offer in the MyUAlbany portal.

You can accept, reduce or decline the amount offered. Reducing the amount you borrow can help lower your total repayment cost.

Before accepting an unsubsidized loan, consider whether you can pay some or all of the interest while you are in school. Doing so can reduce the amount that accrues before repayment begins.

What Do I Need to Do Before My Loan Can Be Paid?

Before UAlbany can disburse your Federal Direct Loan, first-time borrowers must complete Entrance Counseling and a Master Promissory Note on the Federal Student Aid website.

These steps confirm that you understand your responsibilities as a borrower and agree to repay the loan according to federal loan terms.

Your loan cannot be paid to your student account until all required loan steps are complete.

Note: If you borrowed a Federal Direct Loan previously, you may not need to complete a new Master Promissory Note unless your prior MPN has expired or is no longer valid.

When Will My Loan Be Applied to My Student Account?

Once your loan is accepted, required steps are complete and your aid is ready to disburse, the loan can be applied to your student account.

The funds are used first to pay eligible University charges. If your financial aid is greater than your balance, you may receive a refund for other education-related expenses.

Note: Because Direct Unsubsidized Loans begin accruing interest when they are disbursed, you should only borrow the amount you need.
 

What Do I Need to Know About Summer Loans?

You may be able to use federal loans for summer study if you meet eligibility requirements.

To qualify for federal loan disbursements in the summer, you must be enrolled at least half-time. Half-time is six degree-applicable credits for undergraduate students and 4.5 degree-applicable credits for graduate students.

Borrowing federal loans in the summer will reduce your loan eligibility for the fall and spring semesters.

Note: Students who need or want to receive financial aid for the Summer Sessions must complete a supplemental application provided annually by the University.

When Do I Have to Repay a Direct Unsubsidized Loan?

Payments on Federal Direct Loans begin six months after you drop below half-time enrollment, leave school or graduate. At UAlbany, less than six credits per semester is considered below half-time enrollment for undergraduate students.

This six-month period is called a grace period. After the grace period ends, you will begin making payments to your federal loan servicer.

Note: Previous gaps in enrollment, other than summer, can use part or all of your grace period.

Frequently Asked Questions