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What is a Stafford Loan?

Get the lowdown on this federal student loan program — including how you can apply.

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The Department of Education offers two types of Direct Stafford Loans to college students depending on the program you’re attending and your financial situation. Like all federal student loans, you’re automatically considered for each when you submit the Free Application for Federal Student Aid (FAFSA).

What is a Stafford Loan?

Stafford Loans, also known as Federal Direct Loans or Direct Stafford Loans, are low-interest loans offered through the federal government to students pursuing an education at an accredited college. These are the same loans you qualify for when submitting the FAFSA. There are two main types of Stafford Loans: Direct Subsidized and Unsubsidized Loans. 

Direct Subsidized Loans

Direct Subsidized Loans, also known as Subsidized Stafford Loans, are only available to undergraduate students who show financial need, which is determined by submitting the FAFSA. 

These loans are slightly cheaper than others because the funds don’t accrue interest while you’re in school or during your six-month grace period.

How much you can receive in subsidized loans varies depending on your grade level. You also can’t receive subsidized loans for more than 150% of the length of the program you’re attending. So if you’re attending a four-year bachelor’s degree program, you can only receive Direct Subsidized Loans for up to six years.

Take a deeper dive into federal Direct Subsidized Loans

Direct Unsubsidized Loans

Direct Unsubsidized Loans, also known as Unsubsidized Stafford Loans, are less restrictive. They’re open to both undergraduate and graduate students, and you don’t have to show financial need to qualify. 

The annual and lifetime limits for unsubsidized loans are also higher than that of subsidized loans. And independent students can borrow even more.

So what’s the catch? Unsubsidized loans begin accruing interest immediately while you’re in school and during your six-month grace period, which makes them more costly.

Take a deeper dive into federal Direct Unsubsidized Loans

Bottom line

Federal Stafford Loans are low-interest student loans offered by the Department of Education to help students pay for college. How much you qualify for — and whether you receive subsidized or unsubsidized loans — depends on the information you provide in the FAFSA. 

You can learn even more about borrowing for school with our guide to student loans.

Frequently asked questions

Exhaust your federal loan options? Apply for a private student loan today

Data indicated here is updated regularly

Name Product Min. Credit Score Max. Loan Amount APR
Ascent private student loans
540
$200,000
2.71% to 12.99%
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675
$200,000
4.07% to 9%
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Varies by lender
4.99% to 11.06%
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