How federal loan origination fees work
Under federal statutory sequestration rules, the US Department of Education deducts an upfront loan fee from each loan disbursement before funds reach your school account.
For Direct Subsidized and Unsubsidized Loans, the fee is 1.057%. For Direct PLUS Loans (Parent and Grad PLUS), the fee is 4.228%. You must repay the full gross borrowed amount, not just the net disbursement.
Worked example
If you accept a $10,000 Direct Unsubsidized loan, the 1.057% origination fee is $105.70, resulting in a net disbursement of $9,894.30 to your university.
For a $20,000 Parent PLUS loan, the 4.228% fee is $845.60, delivering $19,154.40 net while you owe $20,000.
Inputs for the loan fee calculator
Gross loan amount
The total federal loan amount accepted on your financial aid award.
Loan type
Direct Subsidized/Unsubsidized (1.057%) or Direct PLUS (4.228%).
CALCULATOR QUESTIONS
Federal student loan origination fee calculator questions
Do private student loans have origination fees?
Most reputable private student lenders and credit unions charge 0% origination fees, though their interest rates may vary.