What is a Stafford Loan? Answer: Stafford Loans are among the most popular and available of education loans. If you're a graduate or undergraduate student enrolled in an eligible program of study on at least a half-time basis, you can apply for a Stafford Loan. Two types of Stafford Loans are available--subsidized and unsubsidized. With a subsidized Stafford Loan, the federal government pays the interest on the loan while you're in school, for six months after graduation, and during any approved deferment periods. To qualify for a subsidized Stafford Loan, you must demonstrate financial need. Therefore, not everyone is eligible. Your financial need is based on the income and asset information you supply on the federal government's financial aid application, known as the FAFSA. With an unsubsidized Stafford Loan, you are responsible for paying the interest that accrues during the school year, in the six-month period after graduation, and during any deferment periods. Unsubsidized Stafford Loans are not based on financial need, so they can be obtained by students at all income levels. The terms and conditions of both loans are similar, and each has specific annual borrowing limits. If you're interested in applying for a Stafford Loan, talk to a financial aid counselor. One final note: Your lender for a Stafford Loan (subsidized or unsubsidized) can be either the federal government (through the Direct Loan Program) or a private lender (through the Federal Family Education Loan Program). In most cases, you don't choose your lender. Instead, the college will tell you which lender it prefers.