If you need to borrow money to pay for college or graduate school, you're far from alone. For many, that support comes from federal direct student loans. During the 2023-24 academic year, more than 6 million college students took out federal loans, to an average of $13,038.84 each. Below, we dive into everything you need to know about unsubsidized student loans, how they compare to subsidized loans, and how you can qualify.
What are federal direct unsubsidized student loans?
Direct unsubsidized student loans are student loans from the U.S. Department of Education available to undergraduate and graduate students. For unsubsidized student loans:
- You don't have to demonstrate financial need to qualify.
- How much you receive depends on your school's total cost of attendance (COA) minus other sources of financial aid.
- Interest starts accruing immediately on unsubsidized loans, adding to the principal amount.
- Between July 1, 2025 and July 1, 2026, undergraduates have a fixed interest rate of 6.39% – graduate and professional students' is 7.94%.
Subsidized vs. unsubsidized loans
The federal government also offers direct subsidized loans. Unlike the unsubsidized option, subsidized loans are only available to undergraduate students with demonstrated financial need. The government also covers your interest while you're in school, during the six-month grace period after you leave school, and any points of deferment.
Thanks to these benefits, you may want to consider taking out subsidized student loans before unsubsidized if possible.
How much can you receive?
How much you receive in federal student loans depends on your school's total cost of attendance (COA) minus other sources of financial aid, whether you're a dependent or independent student, and your college education level.
For example, dependent first-year undergraduate students can receive up to $5,500 in subsidized and unsubsidized loans. Second-year undergraduate students can receive up to $6,500. Third-year and above students can receive up to $7,500 annually.
The federal government puts caps on how much you can receive in total over your lifetime, too. Dependent students can only borrow up to $31,000 in federal subsidized and unsubsidized loans. Graduate and professional students can borrow up to $138,500. On July 1, 2026, the new aggregate limit for graduate students will be $100,000 and $200,000 for professional students.
How do you qualify for unsubsidized student loans?
To qualify for unsubsidized student loans, you first need to complete the Free Application for Federal Student Aid (FAFSA) and then you need to be:
- Attending an eligible institution
- Enrolled in a program at least half-time
- Pursuing a degree or certificate.
Colleges send financial aid award offers with or shortly after acceptance letters (or in the spring if you're an upperclassman), which will detail how much you can receive in unsubsidized student loans. You can choose to take all of the money offered, some of it, or none of it. Notify your school of your decision before their stated deadline to avoid potential disbursement delays.
How do you pay back unsubsidized student loans?
You can defer unsubsidized student loans payments until six months after you've graduated, dropped below half enrollment, or left school, though you are welcome to start submitting payments earlier.
Current borrowers with no new loans made on or after July 1, 2026, are eligible to enroll in the current Standard, Graduated, Extended, or current Income Based (IBR) repayment plans and may also opt in to the new RAP. Current borrowers may also switch between, enter or remain on existing IDR plans until July 1, 2028.
Borrowers with new loans made on or after July 1, 2026, can be repaid using only two plans: a new standard repayment plan and the new income-based repayment plan, RAP. If a borrower with new loans made on or after July 1, 2026, does not select a plan, they will be assigned to the new standard repayment plan.
If you run into financial trouble, you may qualify for deferment or forbearance. However, interest will continue accruing during deferment. Students can refinance federal loans through private lenders, though they'll lose any federal protections.
If federal loans and other sources of financial aid aren't enough to cover the cost of your dream college, it may be time to consider private student loans. Learn how Citizens can help – call 1-888-411-0266 or stop by your nearest Citizens branch.