Federal Direct Stafford Loans

Federal Direct Stafford Loans

 
There are two Federal Direct Stafford Loan Programs available for student borrowers, subsidized and unsubsidized. All students who wish to borrow through either of these programs must complete the FAFSA each year.

A Subsidized Federal Direct Stafford Loan is a federal loan that must be repaid. Ability to participate in the Subsidized Federal Direct Stafford Loan Program is based on calculated need as determined by the FAFSA. The interest rate is fixed at 3.4%. "Subsidized" means that the interest on this loan is not paid by the student while he or she is enrolled in school. The government pays the interest on this type of loan while you are in school.

An Unsubsidized Federal Direct Stafford Loan is also a federal loan that must be repaid. If a student is not eligible for the Subsidized Federal Direct Stafford Loan, as determined by the results of the FAFSA, an Unsubsidized Federal Direct Stafford Loan can be an alternative. "Unsubsidized" means that interest will accrue while the student is in school. The student can choose to pay the interest while in school or defer the interest and have it added to the principal balance. The interest on this loan is also fixed at 6.8%.