Direct Stafford Loans, from the William D. Ford Federal Direct Loan (Direct Loan) Program, are low-interest loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school. Eligible students borrow directly from the U.S. Department of Education (the Department) at participating schools.

Stafford Loans are available for undergraduate and graduate students and come from Direct Stafford Loans made by the U.S. Department of Education. You will repay a Federal Direct Stafford Loan to the U.S. Department of Education.

Direct Stafford Loans include the following types of loans:

A subsidized loan is awarded on the basis of financial need, as determined by the information you submit on the Free Application for Federal Student Aid (FAFSA).  If you are eligible for a subsidized Stafford loan you will not be charged interest while you are in school on an at least half-time basis, during a grace period of up to six months after you are no longer enrolled on at least a “half-time” basis, or during certain defined deferment periods.  The Federal government pays (subsidizes) the interest during these periods.

An unsubsidized loan is not awarded on the basis of need.  But you still must apply using the FAFSA.  For unsubsidized loans, you will be charged interest from the time the loan is disbursed until it is paid off in full.  However, you can choose to defer payment of interest while you are in school and during any grace or deferment period.  However, if you allow interest to accrue (accumulate) during these periods, it will be capitalized.  This means that interest will be added to the principal amount of your loan, and additional interest will be based on that higher amount.