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Types and Titles - Page 2

© Shauna Zamarripa

Next on our discussion list are the direct and FFEL Stafford loans, which are a major form of self help aid offered by the U.S. Department of Education. However, the programs differ in their availability locations. The Direct Stafford Loan is available through The William D. Ford Federal Direct Loan Foundation, whereas the FFEL Stafford Loan is accessible through the Federal Family Education Loan Program. Albeit the programs are run similarly administratively, the difference lies in the sources of loan funds, the aspects of the application process and the available repayment plans and terms. The programs are the same in the fact that all funding is lent to you through U.S. Government sources. And both of the aforementioned loans can be consolidated later to lower payments and make them more affordable.

The FFEL and Direct Stafford Loans have another aspect in common as well: they are available to students both subsidized and unsubsidized. A subsidized loan is given on a financial need basis, and you will not be charged any interest before you begin the authorized periods of deferment, for the Federal Government "subsidizes" the interest during these periods. An unsubsidized loan, however, is not awarded on the basis of need, but solely on credit. The interest will accumulate from the day the loan is approved and will continue to accumulate from that point on. If you allow the interest to build, it will be capitalized, which means it will be added to the principal balance of the loan amount.

Those eligible to receive a Direct or FFEL Stafford loan are those students enrolled in an eligible program of study at least half time, and meet the general eligibility requirements as stated by the U.S. Department of Education.

The amounts for the programs vary as follows, and in each example, the maximum amount is shown per annual application:

• 1. First year students enrolled in a program of study that is at least one academic year are eligible to receive up to $2,625.00
• 2. Students that have completed their first academic year and under whose program remains another academic year are eligible to receive up to $3,500.00
• 3. Students that have completed two years of study and have one academic year left in their program are eligible for up to $5,500.00
• 4. First year students enrolled in a program of study that is at least one academic year are eligible to receive $6,625.00

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