Direct Unsubsidized Loan is a student loan offered by the US Department of Education for undergraduate and graduate and professional students. Interest accrues from the point of disbursement. No payment is required as long as the student is enrolled at least half-time or in their grace period. Any unpaid interest is capitalized once prior to entering repayment. In the first year, a student can borrow up to $5,500 minus any Direct Subsidized Loan funds. In the second year, the borrower can have up to $6,500 minus any Direct Subsidized Loan funds. For third undergraduates and beyond, the cap of subsidized loan funds is $7,500 minus any Direct Subsidized Loan funds.  Graduate or professional students can borrow up to $20,500 each year in Direct Unsubsidized Loans and the cost of attendance minus other forms of aid.  Annual loan limits may be less based on other financial aid received and the cost of attendance while enrolled. The interest rate on Federal Direct Loans is a fixed rate set annually based on 10-year Treasury plus 2.05% for undergraduate students and 3.60% for graduate and professional students. Federal law created caps on these annual rates at 8.25% for undergraduate students and 9.50% for graduate and professional students.