Which kind of federal student loan do you have, and why does the type matter?

Summary

The type decides who pays the interest while you are in school, who owes the debt, and whether you can still borrow more of it. Direct Subsidized Loans go to undergraduates with financial need, and the Department of Education pays their interest during school and a few other periods; on Direct Unsubsidized Loans the interest is always yours. PLUS loans go to parents and, until July 1, 2026, to graduate and professional students. FFEL and Perkins loans are no longer made, but existing balances are still being repaid.

Stafford is a nickname

Plenty of people still call Direct Subsidized and Unsubsidized Loans "Stafford Loans." StudentAid.gov notes that this is not their official name, and the older FFEL Program had loans actually named Stafford, so the nickname can blur two different programs. The Department of Education lends Direct Loans itself, in four types: Subsidized, Unsubsidized, PLUS, and Consolidation.

Subsidized and Unsubsidized

A Direct Subsidized Loan is for an undergraduate with financial need. The government covers its interest while the student is in school at least half-time, through the six-month grace period, and during any deferment.

A Direct Unsubsidized Loan is open to undergraduate, graduate, and professional students, with no need test. The borrower is responsible for the interest in every period. Interest that goes unpaid during school, deferment, or forbearance keeps building and in some cases is capitalized, meaning it is added to the principal. You can pay it as it accrues even when no payment is due.

PLUS loans

Unlike Subsidized and Unsubsidized Loans, PLUS loans come with a credit check. A parent of a dependent undergraduate can take out a Parent PLUS loan, and the parent alone repays it.

Graduate and professional PLUS loans are no longer available to new borrowers after July 1, 2026. The exception covers students who were enrolled in a program on June 30, 2026 and had received a Direct Loan for it before July 1. As long as they stay in the same program at the same school for the same credential, they can keep borrowing Grad PLUS up to the cost of attendance minus other aid, for up to three academic years or the rest of the program if that is shorter. The new dollar limits are covered in the article on borrowing limits.

FFEL and Perkins, the programs that closed

No new loans have been made under the Federal Family Education Loan Program since June 30, 2010. FFEL balances can include:

Some carry fixed rates and some carry variable rates that reset every year, which the Department still announces annually in the Federal Register.

Perkins Loans were made by schools to students with exceptional financial need. The authority to make new ones ended on Sept. 30, 2017, with final disbursements allowed through June 30, 2018. Every Perkins Loan has a fixed 5% rate, and repayment runs through the school that made it or that school's servicer.

Old loans still count against new limits

Old FFEL Stafford loans still matter for one reason. Since July 1, 2026 a student can borrow $257,500 over a lifetime, and FFEL Stafford loans count toward it alongside Direct loans and Grad PLUS, even the ones paid off long ago. For someone heading to graduate school with FFEL loans from years ago, that running total is one of the caps on how much more federal debt they can take on.

Sources

Written by Kaz (pen name). Figures are copied from the sources' published pages on the dates shown. We have not used these products. Corrections: contact form.