Federal Direct Unsubsidized Loans are generally more accessible due to the absence of a credit check and are suitable for both undergraduate and graduate students. Federal Direct PLUS Loans, while offering higher borrowing limits, require a credit check and come with higher interest rates and fees, making them more suitable for parents or graduate students who need to cover the full cost of attendance and can pass the credit check.
| Attribute | Federal Direct Unsubsidized Loans | Federal Direct PLUS Loans |
|---|---|---|
| Interest Rate (Fixed or Variable) | Fixed. Determined annually based on the high yield of the 10-year Treasury notes auctioned before June 1 of that year, plus a statutory add-on percentage. For loans disbursed between July 1, 2024, and June 30, 2025: Undergraduate: 6.53%, Graduate/Professional: 8.08%. For loans disbursed between July 1, 2025, and June 30, 2026: Undergraduate: 6.39%, Graduate/Professional: 7.94%. Maximum interest rates are 8.25% for undergraduate students and 9.50% for graduate and professional students. | Fixed. For loans disbursed between July 1, 2024, and June 30, 2025, the interest rate is 9.08%. For loans disbursed between July 1, 2025, and June 30, 2026, the interest rate is 8.94%. The interest rate is determined annually based on the high yield of the 10-year Treasury note auctioned before June 1, plus a statutory add-on percentage. |
| Loan Fees (Origination Fee) | 1.057% for loans disbursed on or after October 1, 2020, and before October 1, 2025. The origination fee is deducted from the loan disbursement. | Origination fees are 4.228% for loans disbursed on or after October 1, 2020. This fee is deducted from the loan amount before disbursement. |
| Repayment Options (Standard, Graduated, Income-Driven) | Standard Repayment: Fixed monthly payments over ten years. Graduated Repayment: Payments start lower and increase over time. Extended Repayment: Fixed or graduated payments over up to 25 years. Income-Driven Repayment (IDR) Plans: Payments are based on income and family size. | Standard Repayment Plan: Fixed monthly payments for up to 10 years. Graduated Repayment Plan: Payments start low and increase every two years, with a repayment period of up to 10 years (or up to 30 years if consolidated). Extended Repayment Plan: Available if you have over $30,000 in Direct Loan debt; offers fixed or graduated payments for up to 25 years. Income-Contingent Repayment (ICR) Plan: Only available for Parent PLUS loans if they are consolidated into a Federal Direct Consolidation Loan. Monthly payments are 20% of discretionary income, and the remaining balance is forgiven after 25 years of payments. |
| Deferment and Forbearance Options | Deferment: Temporarily suspends loan payments. Interest may accrue. Forbearance: Allows you to temporarily stop making payments or reduce payment amount. Interest continues to accrue. | Deferment: Allows you to temporarily postpone payments, but interest continues to accrue on PLUS Loans. Deferment may be available while the student is enrolled at least half-time and for six months after they cease to be enrolled. Forbearance: Allows you to temporarily suspend payments due to illness or financial hardship, but interest accrues on all loan types. |
| Eligibility Requirements | Must be enrolled at least half-time in a degree-seeking program. Must be a U.S. citizen, national, or permanent resident. Must not be in default on previous federal direct loans. Must meet Satisfactory Academic Progress (SAP) standards. Must complete Entrance Counseling and a Master Promissory Note (MPN). Available to both undergraduates and graduate or professional degree students. Financial need is not a requirement. | Be the biological, adoptive, or in some cases, stepparent of a dependent undergraduate student enrolled at least half-time in an eligible college. Graduate or professional degree student enrolled at least half-time. Complete the Free Application for Federal Student Aid (FAFSA). Not have an adverse credit history. Meet general eligibility requirements for federal student aid, including U.S. citizenship or eligible non-citizen status. |
| Loan Limits (Annual and Aggregate) | Annual Limits: Undergraduate: $5,500 to $12,500. Graduate: Up to $20,500. Aggregate Limits: Undergraduate: $57,500 (with a maximum of $23,000 in subsidized loans). Graduate: $138,500 (includes any amount borrowed for undergraduate study, with a maximum of $65,500 in subsidized loans). | The maximum Direct PLUS Loan amount is the cost of attendance minus any other financial aid received. There are no fixed annual or aggregate loan limits. |
| Credit Score Requirements | Federal Direct Loans do not require a credit check. | There is no minimum credit score required. However, a credit check is performed, and you cannot have an adverse credit history. Adverse credit history includes debts 90 or more days delinquent, or that have been placed in collection or charged off during the two years preceding the credit check. |
| Cosigner Requirements (for PLUS Loans) | A cosigner is not required for Federal Direct Unsubsidized Loans. However, if a parent is applying for a Direct PLUS Loan and has an adverse credit history, they may need an endorser (co-signer). | A cosigner (endorser) is not required unless the loan is denied due to adverse credit history. An endorser is someone with good credit who agrees to repay the loan if the borrower cannot. The student cannot be the endorser. |
| Tax Deductibility of Interest | Interest paid on student loans may be tax-deductible. | Interest paid on student loans, including PLUS Loans, may be tax-deductible. |
| Loan Forgiveness Programs Eligibility | Direct Loans are eligible for forgiveness through Income-Driven Repayment (IDR) plans and the Public Service Loan Forgiveness (PSLF) program. | Income-Contingent Repayment (ICR): Parent PLUS Loans can become eligible for ICR if consolidated into a Direct Consolidation Loan. After 25 years of qualifying payments, the remaining balance may be forgiven. Public Service Loan Forgiveness (PSLF): Direct PLUS Loans are eligible for PSLF if consolidated into a Direct Consolidation Loan and repaid under an income-driven repayment plan. Requires 120 qualifying monthly payments while working full-time for a qualifying employer. |
| Servicer Options and Quality | The U.S. Department of Education hires private contractors to service federal student loans. | Your loan will be assigned to a loan servicer who will manage the repayment of your loan. |
| Application Process and Approval Time | Complete the Free Application for Federal Student Aid (FAFSA). Contact the school's financial aid office. Complete an electronic Direct Unsubsidized Loan Request Form. Complete a Direct Unsubsidized Loan Master Promissory Note (MPN). Complete Entrance Counseling. Allow two weeks for the loan request to be processed. | Complete the FAFSA. Apply for a Direct PLUS Loan online at StudentAid.gov. Complete a Direct PLUS Loan Master Promissory Note (MPN). First-time graduate student borrowers must complete entrance counseling. The application process can take up to 3 weeks. Credit approvals are typically valid for 180 days. |
| Price | Not available | Not available |
| Ratings | Not available | Not available |
| Pros | Fixed interest rates, Multiple repayment options, Deferment and forbearance options available, No credit check required, Eligible for loan forgiveness programs | Not available |
| Cons | Origination fees increase the total cost of borrowing, Interest may accrue during deferment, Interest continues to accrue during forbearance | Not available |
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