Apply for a Federal Direct Stafford Loan

What’s the difference between Direct Subsidized Loans and Direct Unsubsidized Loans?

Direct Subsidized Loans and Direct Unsubsidized Loans are federal student loans offered by the U.S. Department of Education (ED) to help eligible students cover the cost of higher education at a four-year college or university, community college, or trade, career, or technical school. (You might see Direct Subsidized Loans and Direct Unsubsidized Loans referred to as Stafford Loans or Direct Stafford Loans, but these aren’t the official loan names.)

Direct Subsidized Loans

Who can get Direct Subsidized Loans?

Direct Subsidized Loans are available to undergraduate students with financial need.

How much can you borrow?

Your school determines the amount you can borrow, and the amount may not exceed your financial need.

Who will pay the interest?

The U.S. Department of Education pays the interest on a Direct Subsidized Loan

• while you’re in school at least half-time,
• for the first six months after you leave school (referred to as a grace period*), and
• during a period of deferment (a postponement of loan payments).

Direct Unsubsidized Loans

Who can get Direct Unsubsidized Loans?

Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need.

How much can you borrow?

Your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive.

Who will pay the interest?

You are responsible for paying the interest on a Direct Unsubsidized Loan during all periods.

Loan Eligibility

Am I eligible for a Direct Subsidized Loan or a Direct Unsubsidized Loan?

To receive either type of loan, you must be enrolled at least half-time at a school that participates in the Direct Loan Program. Generally, you must also be enrolled in a program that leads to a degree or certificate awarded by the school. Direct Subsidized Loans are available only to undergraduate students who have financial need. Direct Unsubsidized Loans are available to both undergraduates and graduate or professional degree students. You are not required to show financial need to receive a Direct Unsubsidized Loan.

Applying for a Loan

To apply for a Direct Loan, you must first complete and submit the Free Application for Federal Student Aid (FAFSA®) form. Your school will use the information from your FAFSA form to determine how much student aid you are eligible to receive. Direct Loans are generally included as part of your financial aid package.

What additional steps must I take to receive my loan?

If your financial aid package includes federal student loans, your school will tell you how to accept the loan.

If it is your first time receiving a Direct Loan, you will be required to

• complete entrance counseling, a tool to ensure you understand your obligation to repay the loan; and
• sign a loan contract called a Master Promissory Note, agreeing to the terms of the loan.

Contact the financial aid office at the school you are planning to attend for details regarding the process for receiving a loan at your school.

How will I receive my loan?

The school will first apply your loan funds to your school account to pay for tuition, fees, room and board, and other school charges. If any additional loan funds remain, they will be returned to you. All loan funds must be used for your education expenses.