b'43LOANSA loan is money you borrow and must repay with interest over a specified period of time. For this reason, loans are the leastPAYING FOR COLLEGEdesirable type of financial aid. That said, many students receive loans as part of their financial aid package, and when managed carefully, they can be a responsible investment in your future.Loans are offered by the federal government and by private banks and financial institutions. Federal student loans, offered by the government, are preferable to private loans as they generally offer lower, fixed interest rates, andrepayment does not begin until six months after you graduate or stop attending college. Repayment of private loans may begin as soonas the money is borrowed. You must complete the FAFSA to apply for all federal loans. Private loans require a loan application. To learn more about the difference between federal and private loans, visit www.studentaid.gov/understand-aid/types/loans/federal- vs-private.The most common types of college loans include:Federal Direct Loans are available to all students enrolled at least half-time and feature low interest rates (currently 2.75%) and several repayment options. These loans can be subsidized or unsubsidized. Subsidized loans are based on financial need. The government subsidizes (pays) the interest on your loan while you are in school and fora grace period of six months after graduation or when you are no longer enrolled. Unsubsidized loans are not based on financial need. You will be charged interest from the time you borrow the money until the loanis paid off.Federal Direct PLUS Loans can be taken out by parents of dependent college students to help pay for educational expenses not covered by other financial aid. Parents must undergo a credit check. Like unsubsidized loans, interest (currently 6.28%) is charged on PLUS loans while you are in college. If your parents are ineligible for a PLUS loan due to a poor credit history, your colleges financial aid office may be able to certify you to receive more Federal Direct Unsubsidized Loans.Learn more about Federal Student Loans at www.studentaid.gov/understand-aid/types/loans.Private Student Loans Loans from private institutions are available to pay college expenses, based on your credit history. Private loans usually have higher interest rates than government loans and less favorable repayment terms. Accordingly, you and your family should consider taking out a private loan only if you have exhausted all other loan options and know you will be able to meet repayment obligations. While all students are eligible to receive federal loans, private student loans may require a co-signer.Repaying Your Student LoansStudent loans can help you invest in your future; they can also limit your choices after graduation. You must understand fully the impact of the financial obligation you are assuming. Find out your student loan repayment options at www.studentaid.gov. The consequences of not paying your student loan can severely affect your credit rating far into the future, making it difficult for youto buy a car, purchase a home, or obtain a credit card. Learn more about managing your loans: www.aessuccess.org/manage; and the dangers of not paying student loans:www.studentaid.gov/manage-loans/default.'