Federal Direct Stafford Loans, from the William D. Ford Federal Direct Loan Program, are low-interest loans for eligible students to help cover the cost of higher education. These loans include:
- Federal Direct Subsidized Stafford Loans - for students with financial need. You are not charged interest while you're in school at least half-time, during grace periods, or deferment periods. Note: If you receive a Federal Direct Subsidized Stafford Loan that is first disbursed between July 1, 2012 and July 1, 2014, you will be responsible for paying any interest that accrues during your grace period. If you choose not to pay the interest that accrues during your grace period, the interest will be added to your principal balance.
- Federal Direct Unsubsidized Stafford Loans - are NOT based on financial need. Interest is charged from the time the loan is disbursed until it is paid in full. You can pay the interest while you are in school and during grace periods and deferment or forbearance periods, or you can allow it to accrue and be capitalized (that is, added to the principal amount of your loan). If you choose not to pay the interest as it accrues, this will increase the total amount you have to repay because you will be charged interest on a higher principal amount.
For Federal Direct Stafford Loans, there is a 1% default fee deducted proportionately from each loan disbursement. The specific loan fee that you are charged will be reflected on a disclosure statement sent by the Federal government.
Use this printable document to help you understand the Federal Direct Stafford Loan terms and application process.