Direct Loans (also known as Stafford Loans) are federal student loans to help students pay for college. Direct Loans are the most popular federal student loan as they offer students flexible terms and favourable interest rates.
There are two types of Direct Loans available:
Direct Subsidized Loans – With direct subsidized loans, the federal government pays for the interest on the loan while the student is still in school and during any deferment periods. This type of loan is reserved for undergraduate students with financial need. The interest rates are favourable and are usually lower than most private loans making them an attractive option for students who have unmet financial need.
Direct Unsubsidized Loans – With direct unsubsidized loans, students are responsible for any interest accrued while in school or during any deferment periods. Both undergraduate and graduate students are eligible for this type of loan. Financial need is not a requirement to be eligible to receive a direct unsubsidized loan.