Student Financial Services
Federal Loans
Basics
The Direct Loan program provides loans to qualifying students to assist with paying for educational expenses. The Direct Loan program includes Federal Direct Subsidized, Federal Direct Unsubsidized, and Federal Direct PLUS Loans.
Annual Loan Limits
The FY2025 Federal Budget Reconciliation Act (OB3) introduces several important changes to federal student aid, particularly on loan limits and program availability, with most provisions taking effect on July 1, 2026. Please be aware that eligibility requirements are mandated by the Department of Education and any changes to federal policy may affect availability of these federal student aid resources.
The new federal loan limits vary depending on the student's year in school, status as dependent or independent, enrollment status (full-time or less than full-time), program of study, and eligibility for exception to borrow at pre-OB3 limits.
Please review Federal Student Aid’s One Big Beautiful Bill Act (OB3) updates page which includes student borrower scenarios and definitions of important terms and concepts, including information on who is considered a new borrower and who can qualify for a limited exception and borrow at Pre-OB3 loan limits.
The Pre-OB3 Loan Limits and New Loan Limits are outlined below.
| Dependent Undergraduate Students | Pre-OB3 Annual Loan Limit | New Annual Loan Limit |
| Subsidized & Unsubsidized Loans | First Year: $5,500 (not more than $3,500 can be subsidized) Second Year: $6,500 (not more than $4,500 can be subsidized) Third Year & Beyond (Total Each Year): $7,500 (not more than $5,500 can be subsidized) | No Change |
| Parent PLUS Loans | Cost of attendance minus other aid received | $20,000 on behalf of each student |
| Independent Undergraduate Students | Pre-OB3 Annual Loan Limit | New Annual Loan Limit |
| Subsidized & Unsubsidized Loans | First Year: $9,500 (not more than $3,500 can be subsidized) Second Year: $10,500 (not more than $4,500 can be subsidized) Third Year & Beyond (Total Each Year): $12,500 (not more than $5,500 can be subsidized) | No Change |
| Graduate Students | Pre-OB3 Annual Loan Limit | New Annual Loan Limit |
| Unsubsidized Loans | $20,500 | No Change |
| Graduate / Professional PLUS Loans | Cost of attendance minus other aid | Eliminated - No Longer Available |
| Medical Students | Pre-OB3 Annual Loan Limit | New Annual Loan Limit |
| Unsubsidized Loans | $20,500 | $50,000 |
| Graduate / Professional PLUS Loans | Cost of attendance minus other aid | Eliminated - No Longer Available |
Origination Fees
The loan fee/origination fee is subtracted proportionately from each loan disbursement.
| Loan Type | For Loans Disbursed on or after 10/1/26 and before 10/1/27 | For Loans Disbursed on or after 10/1/25 and before 10/1/26 |
| Undergraduate Subsidized & Unsubsidized | TBD | 1.057% |
| Graduate/Professional Unsubsidized | TBD | 1.057% |
| Graduate PLUS | TBD | 4.228% |
| Parent PLUS | TBD | 4.228% |
Interest Rates & Grace Periods
Interest rates on Federal Direct Loans are set by federal law each year. The interest rate, once established, is a fixed rate that will apply for the life of the loan. Interest begins to accrue on federal loans once they are disbursed (paid) to the student account.
- For Subsidized Loans, the federal government pays the interest that accrues during school and during the 6-month grace period that begins once enrollment ends (or drops below half-time).
- For Unsubsidized Loans, borrowers may choose to make quarterly interest payments during school and during the 6-month grace period or they may choose to defer the interest. Unpaid interest will be capitalized (added to the principal balance) when the loan enters repayment.
- For PLUS Loans, repayment begins within 60 days after the loan is fully disbursed. Borrowers who choose to defer repayment during school may choose to make quarterly interest payments during that time. Unpaid interest will be capitalized (added to the principal balance) when the loan enters repayment.
Learn more about when interest accrues and how interest is calculated on Federal Student Aid's Interest Rates page.
| For Loans Disbursed on or after 7/1/26 and before 7/1/27 | |
| Loan Type | Interest Rate |
| Undergraduate Subsidized & Unsubsidized | TBD |
| Graduate/Professional Unsubsidized | TBD |
| Graduate PLUS | TBD |
| Parent PLUS | TBD |
| For Loans Disbursed on or after 7/1/25 and before 7/1/26 | |
| Loan Type | Interest Rate |
| Undergraduate Subsidized & Unsubsidized | 6.39% |
| Graduate/Professional Unsubsidized | 7.94% |
| Graduate PLUS | 8.94% |
| Parent PLUS | 8.94% |
Loan Application Process
Any students who are U.S. citizens or permanent residents and are enrolled at least half time can apply for federal loans, even if loans were not in the initial financial aid package.
Before borrowing any federal loans, students must complete the Free Application for Federal Student Aid (FAFSA) along with any other requested/required documentation. Learn more through the respective Office of Financial Aid: Undergraduate Students, Graduate Students, Medical Students.
To borrow a PLUS Loan, eligible borrowers must complete the PLUS Loan application process in addition to completing the FAFSA.
Federal loan eligibility and processing is administered by the respective Office of Financial Aid in partnership with Student Financial Services (SFS).
- The Office of Financial Aid determines federal loan eligibility and creates award offers.
- Student Financial Services (SFS) notifies students to accept or decline their award offers through Banner Self Service. (Go to the Financial Aid tab anytime after May 1st for the upcoming year.) SFS also notifies students to complete federal loan counseling and promissory note requirements through studentaid.ed.gov. Review our Loan Process page to learn more about accepting loans, completing requirements, and loan disbursement.
- SFS disburses loans to students' accounts once all requirements are completed and the semester has begun.
Additional Information
Learn about the loan process -- application, requirements, and disbursement.
Whether you are graduating, dropping below half-time, or taking a leave, all loan borrowers are required to complete loan exit counseling. Exit counseling must be completed now, even if you plan to return to Brown to continue as a graduate or medical student or enroll at another school.
If you're a new borrower, been in school for a while, graduating soon, or a Brown alum, there are steps you can take to be successful in your loan repayment.