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There are two main types of Stafford loans, Direct Loans and Federal Family Education Loan funds. Direct Loans are a type of Stafford loan that you borrow directly from the federal government and have a single contact-the Direct Loan Servicing Center-for everything related to the repayment of your loans, even if you receive Direct Loans at different schools. The Federal Family Education Loan funds FFEL funds will come from a bank, credit union, or other lender that participates in the program. You will need to choose a lender if you obtain this loan. Schools that participate in the FFEL Program will usually have a list of preferred lenders. Borrowers may choose a lender from that list, or choose a different lender they prefer.

There are three types of Direct Loans. Direct Subsidized Loans are for students with demonstrated financial need, as determined by federal regulations. No interest is charged while a student is in school at least half-time, during the grace period and during deferment periods. Direct Unsubsidized Loans are not based on financial need; interest is charged during all periods, even during the time a student is in school and during grace and deferment periods, but they still have a very low interest rate. Direct PLUS Loans are unsubsidized loans for the parents of dependent students and for graduate/professional students. PLUS loans help pay for education expenses up to the cost of attendance minus all other financial assistance. Interest is charged during all periods. There are additional requirements to receive a PLUS Loan that are not required of the other types of Direct Loans and the interest rate is higher than Direct Unsubsidized Loans. For more on the PLUS Loan, go to PLUS Parent Loans. When you receive more than one of the above listed loans, you can combine them into a Direct Consolidation Loans.

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