There are two types: direct subsidized loans and direct unsubsidized loans. Subsidized loans are based on financial need, and the amount is determined by your FAFSA application. No interest is charged on the loan as long as you are enrolled in school at least part time, and during grace periods and deferment periods. Unsubsidized loans do not require the student to show financial need. The amount of this loan is also determined by the institution that you attend, and interest will accrue from the time that you actually get the loan. While you are in school, you may opt to just pay the interest on this loan, or let the interest accumulate over time, and then have this amount added to your original loan amount for repayment. If you choose this option, the original loan amount will be larger, since you will be adding to the value of the loan, the amount of interest that you must repay.