Federal Stafford Loans are either subsidized or unsubsidized. A Subsidized Loan is awarded on the basis of financial need. The government pays the interest on the loan until the student begins repayment or in periods of deferment. An Unsubsidized Loan is not awarded on the basis of financial need. Interest is accrued from the time the loan is disbursed until it is paid in full.
Students can choose to pay the interest while they are in school or allow it to accumulate.
The latter option will increase the amount to be repaid. Interest is assessed annually on July 1st. The student must select a lender, which is typically a bank, savings and loan or credit union. Most schools maintain a list of most commonly used lenders to assist the student in making a selection. Students should research each lender carefully and select from those lenders that offer the most incentives at time of repayment.