The Federal Direct Loan program offers loans to students and parents of dependent undergraduate students. Federal Direct Loans offer a variety of deferment and repayment options, and are financed directly by the U.S. Department of Education so there's no need to choose a lender. These loans are financial obligations that must be repaid. While some loans are based on financial need, there are loan programs available to all federally-eligible students - regardless of income.
Please refer to the Annual Limits chart (see below) for the maximum amount students may borrow in Federal Direct Loans per academic year. Keep in mind that you should not borrow more than you need or can comfortably repay after leaving school. We recommend using the Loan Simulator on the Federal Student Aid website as a guide as to what your monthly payments will be once you enter repayment.
Eligibility
A Federal Direct Loan is a low-interest loan available to college students who are enrolled at least half-time, enrolled in a degree granting program, and meet other basic requirements. These loans do not require credit approval; eligibility is determined by filing the FAFSA.
To apply for a Direct Loan
- Complete the Free Application for Federal Student Aid (FAFSA)
- Submit any documentation requested by the CSU Channel Islands Financial Aid office
- When the student's financial aid file is complete, an award package will be generated, and can be accessed myCI
- Accept the loan offer on myCI (you may accept a lesser amount than what is offered)
- Complete the Master Promissory Note (MPN)
- Complete the Loan Entrance Counseling
Subsidized Loans
A subsidized loan is awarded on the basis of financial need. The U.S. government pays (or subsidizes) the interest on this loan while you are enrolled at least half-time, and until the end of the six-month grace period.
Unsubsidized Loans
An unsubsidized loan is awarded regardless of need. You are charged interest on the amount disbursed from the date of disbursement and you may either make – or defer – interest payments while you are in school and during the six-month grace period. If you defer your interest payments, the accumulated interest will be capitalized, or added, to the principal of your loan when you enter repayment. All future interest charges are then based on the new, higher principal amount.
Parent PLUS Loan
Parents of dependent undergraduate students can take out a Parent PLUS Loan to supplement their student's aid package. Parents may choose to defer payments on a PLUS Loan until six months after the date the student ceases to be enrolled at least half-time and to pay the accruing interest monthly or quarterly, or to defer interest payments and allow interest to be capitalized quarterly. A parent also has the option to choose not to defer payment, and can begin repaying both principal and interest while the student is in school.
- For more information on the Parent PLUS Loan refer to Parent PLUS Loan Basics (PDF, 5.01MB) from Direct Loans
- To receive, or initiate, a Parent PLUS Loan, the parent should complete an Parent PLUS Loan application
Graduate PLUS Loan
This program is only for those students in graduate or doctorate level programs, and is meant to supplement the funding from the Direct Loan program. You must be enrolled at least half-time in a degree-granting program and taking courses that lead to your degree. Students will receive an automatic deferment on the principal amount of the loan while enrolled at least half-time. You are charged interest from the time the loan is disbursed and may either make or defer interest payments while you are in school and during periods of deferment. If you defer your interest payments, the accumulated interest will be capitalized, or added, to the principal of your loan when you enter repayment. All future interest charges are then based on the new, higher principal amount.
Unlike the Subsidized/Unsubsidized Loan, there is no grace period for the Graduate PLUS Loan; you will enter repayment immediately after you graduate, withdraw, or drop to less than half-time enrollment.
- Prior to applying for a Grad PLUS Loan, you must complete the FAFSA and apply for your maximum eligibility through the Direct Loan program ($20,500 per academic year).
- To receive, or initiate, a Grad PLUS Loan, the student should complete a Grad PLUS Loan application
Interest rates
Congress sets interest rates on Direct Loans from the U.S. Department of Education through legislation that ties the rate to financial markets. The chart below displays the interest rates for Direct Subsidized, Direct Unsubsidized, and Direct PLUS Loans first disbursed on or after July 1, 2023 and on or before June 30, 2024.
| Loan | Interest Rate |
|---|---|
| Direct Subsidized Loan (Undergraduates) | 5.50% |
| Direct Unsubsidized Loan (Undergraduates) | 5.50% |
| Direct Unsubsidized Loan (Graduate/Professional Students) | 7.05% |
| Direct PLUS Loans (Parents and/or Graduate or Professional Students) | 8.05% |
Loan Origination Fee
All Direct Loans are subject federal origination fee. The loan fee is a percentage of the loan amount and is proportionately deducted from each loan disbursement. The percentage varies depending on when the loan is first disbursed, as shown in the chart below.
| First Disbursement | Made on or after | Made before | Origination Fee |
| Direct Subsidized or Unsubsidized | 10/1/2020 | 10/1/2024 | 1.057% ($58.13 on a $5,500 loan) |
| Direct PLUS | 10/1/2020 | 10/1/2024 | 4.228% ($422.80 on a $10,000 loan) |
Annual Limits
Dependent Students
| Borrower's Academic Level | Maximum Subsidized | Total Eligibility (Subsidized & Unsubsidized) |
|---|---|---|
| Freshman (0-30 units) | $3,500 | $5,500 |
| Sophomore (31-60 units) | $4,500 | $6,500 |
| Junior and Beyond (Inc. 2nd Bachelor's) | $5,500 | $7,500 |
| Teaching Credential Students | $5,500 | $5,500 |
Independent Students
(and Dependent Students whose parent(s) are denied a Parent PLUS Loan)
| Borrower's Academic Level | Maximum Subsidized | Total Eligibility (Subsidized & Unsubsidized) |
|---|---|---|
| Freshman (0-30 units) | $3,500 | $9,500 |
| Sophomore (31-60 units) | $4,500 | $10,500 |
| Junior and Beyond (Inc. 2nd Bachelor's) | $5,500 | $12,500 |
| Teaching Credential Students | $5,500 | $12,500 |
| Graduate / Professional | $0 | $20,500 |
† For periods of study shorter than an academic year:
The amounts students can borrow will be less than those listed. In addition, loan amounts may be less if students receive other financial aid that is used to cover a portion of their cost of education. All students will be automatically offered the maximum amount allowed based upon grade level, cost of education, and other financial aid received.
Restriction for graduating seniors with one-semester loan:
We are required by federal law to prorate (determine partial loan eligibility) when an undergraduate student plans to graduate at the end of the one term for which they are receiving a Direct Loan. For example, a senior who will be graduating at the end of fall term will be subjected to proration of his/her annual loan amount because he/she will not attend the whole academic year. The proration is based on the annual loan limit ($5,500) multiplied by the number of units needed for graduation divided by 24. If you think you may be under this restriction, please come into our office for further clarification.
Aggregate Limits
| Dependency Status | Maximum Subsidized | Total Eligibility (Subsidized & Unsubsidized) |
|---|---|---|
| Dependent | $23,000 | $31,000 |
| Independent | $23,000 | $57,500 |
| Graduate / Professional ‡ | $65,500 | $138,500 |
‡ Aggregate limit for Graduate students includes amount borrowed as an undergraduate student.
Repayment
As a borrower, it is your responsibility to know how much you have borrowed, who is your loan servicer, and how much you will be required to repay when you leave school. Student Aid (requires FSA ID) will help you collect your federal loan borrowing history at all educational institutions. Payment of principal is deferred while students are enrolled in school at least half-time. After you graduate, withdraw, or drop to less than half-time enrollment, you will have a six-month grace period - during which time no payment on principal will be due. Repayment on the principal amount begins at the conclusion of the grace period.
For questions regarding Loan Repayment, Deferment or Forbearance, we recommend you contact your loan servicer. Learn more at Student Aid .