928-523-4951
Direct loans for NAU students
What they are and how to get them
Direct loans are offered directly from the federal government and are meant to help students pay for college. These are the most common type of student loans. Direct loans generally have more favorable terms and conditions than private loans. We recommend using direct loans when possible over private loans.
There are two types of direct loans:
Subsidized loans
Subsidized loans won’t accrue interest while you’re still attending school at least half-time. Students must demonstrate financial need to be eligible for subsidized loans. Graduate students are not eligible for subsidized loans.
Half-time enrollment (6+ credits for undergraduates and 5+ credits for graduates) is required. You’re responsible for paying the interest on unsubsidized loans even while you’re still in college.
Unsubsidized loans
Unsubsidized loans are available to all undergraduate and graduate students as long as they have not met the lifetime loan limit.
Half-time enrollment is required. Interest accrues on on unsubsidized loans even while you’re still in college.
Loan interest rates and fees
Interest rates are set by US Congress each year.
Undergraduates: The interest rate for 2026-2027 subsidized and unsubsidized loans originated on or after July 1, 2026 is 6.52%.
Graduates/professionals: The interest rate for 2026-2027 unsubsidized loans originated on or after July 1, 2026 is 8.07%.
All federal student loans have a 1.057% origination fee charged by the US Department of Education.
Loan reductions
Federal Direct Subsidized and Unsubsidized Loans will be prorated based on the number of credit hours a student is enrolled in. If a student enrolls in fewer than the full-time minimum, their loans will be reduced.
Full-time minimums:
- Undergraduates: 12 credits
- Graduates/professionals: 9 credits
Schedule of Reductions (SOR) policy
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduced major changes to federal student aid programs. Several provisions affecting student loans became effective July 1, 2026. Among the most significant changes is the introduction of the Schedule of Reductions (SOR), which requires federal student loan eligibility to be reduced based on enrollment level.
Beginning with the 2026 fall term, annual federal student loan amounts will be reduced based on enrollment. Full-time students (12 or more credits for undergraduates and 9 or more credits for graduates) will receive a full loan amount, but part-time students (6-11 credits for undergraduates and 5-8 credits for graduates) will receive a proportional total loan amount. Students must enroll at least half-time to be eligible for federal direct loans.
One Big Beautiful Bill Act (OBBBA) federal loan changes
| Borrower/Loan Type | Legacy/Interim Exception Limits* | OBBBA Limits |
|---|---|---|
| Dependent Undergraduate | Lifetime limit: $31,000 Annual limit: between $5,500 and $7,500 depending on the student’s academic level | Unchanged |
| Independent Undergraduate | Lifetime limit: $57,500 Annual limit: between $9,500 and $12,500 depending on the student’s academic level | Unchanged |
| Graduate | Lifetime limit: $138,500 (includes undergraduate loans) Annual limit: $20,500 | Lifetime limit: $100,000 (excludes undergraduate loans) Annual limit: $20,500 |
| Professional Graduate | Lifetime limit: $224,000 (includes undergraduate loans) Annual limit: $35,777 | Lifetime limit: $200,000 (excludes undergraduate loans) Annual limit: $50,000 |
| Graduate PLUS Loan Borrowers | No lifetime limit Annual limit: Up to the student’s Cost of Attendance | Eliminated for new borrowers |
| Parent PLUS Loan Borrowers | No lifetime limit Annual limit: Up to the student’s Cost of Attendance | Lifetime limit: $65,000 per dependent student Annual limit: $20,000 per dependent student |
| Overall Lifetime Limit | None, aggregate limits could be paid down and re-borrowed | $257,500 total federal loan limit Includes subsidized, unsubsidized and graduate PLUS loans Excludes parent PLUS loans |
*Note: The legacy/interim exception requires consecutive fall/spring enrollment and lasts for the shorter of 3 years or until the student’s remaining expected time to credential.
Single Semester Loans
If you are a graduating senior and you only need one semester’s worth of classes to graduate, this can affect how your financial aid is applied and disbursed to you.
For example, your estimated Cost of Attendance (COA), which is used to determine how much aid you are eligible for, will be reduced to one semester worth of costs instead of two, which can then affect how much aid you are eligible for.
Notes and considerations
- Students may not receive all of their fall/spring financial aid in a single semester.
- If you were offered aid for the fall and spring semesters and do not end up attending in the fall semester (and are not enrolled for spring), your aid package may be canceled mid-fall. If you plan on attending the spring semester, make sure you’re enrolled and accept your aid for the spring semester in LOUIE.
- Federal subsidized and unsubsidized loans will be prorated based on the number of credit hours you are enrolled. If you’re not taking an entire years’ worth of classes at full-time, you might not be eligible to receive your maximum annual loan limit.
Tools and resources
- View your loan offers: log into your LOUIE account and click the “Financial Aid” menu tile to view your award offers each academic year. Subsidized and unsubsidized loans must be accepted via the LOUIE account if a student is interested in borrowing.
- Additional requirements: after accepting your loan in LOUIE, you must complete Entrance Counseling, which will help you understand your loan and how it works. You’ll also need to sign a Master Promissory Note, which is an agreement to repay your loans and their interest.
- Loan repayment and consolidation: learn more about the process and the best methods for paying off your student loans.
- Review loan amount limits: learn more about how much you can borrow per academic year or in your lifetime.