What is a Direct Stafford Loan?

A Direct Stafford Loan is one of the most common loan programs for students. When you apply for this loan, you are given money to pay for school from the U.S. Government. Parents can even apply for a PLUS Loan, while students are also given the option of applying for various consolidation loans. As with a regular Stafford Loan, the options for a Direct Stafford Loan are either subsidized or unsubsidized.

Subsidized Direct Stafford Loan

You will be awarded a subsidized Direct Stafford Loan based on your financial needs. You won't be charged interest prior to starting your payments or during any periods of deferment that have been authorized.

Unsubsidized Direct Stafford Loan

Unlike the subsidized loan, an unsubsidized Direct Stafford Loan is now given to people based on financial needs and you'll also be charged interest beginning from the time the loan is approved until it is completely paid off. Any accumulated interest will become capitalized, meaning that it will become added to the loan's principal amount and any additional interest charged will be based on the new, higher amount. Therefore, you'll end up paying a higher repayment amount. To avoid this, pay any interest that has accumulated as it does, so you can pay less over the loan's duration.

Who qualifies?

You are eligible for a Direct Stafford Loan if you are a student who is enrolled at least half-time. Loan amounts available through a Direct Stafford Loan depend on many factors, such as if you are an undergraduate or a graduate student, and how many years of study you've already completed. You should talk to your lender to find out how much you are eligible for while discussing your options.

How to get the loan

You pay for a Direct Stafford Loan through the school you are attending. The amount you receive must first pay for room and board, tuition, fees, and other charges given by your school. Any money remaining can either be issued to you in cash or by check. Once you've graduated, you have a six-month grace period to pay off your loans. A Direct Stafford Loan is a good way to pay for your college expenses. Remember to do your research to make sure this loan is right for you.