​Direct Subsidized Loans: These loans are available only to undergraduate students who have demonstrated financial need. The federal government pays interest on these loans while students are attending school as well as during qualifying periods of deferment after graduation. The fact the loans do not accrue interest provides substantial savings. Direct Unsubsidized Loans: Both undergraduate and graduate students are eligible for these loans. There is no requirement to show financial need, although students must still complete the FAFSA to be eligible to borrow.