A quick education on federal loans

Stafford Loans: Stafford loans are made directly to students -- and since they're guaranteed by the government, their rates are kept low.

There are two types of Stafford loans. With a Subsidized Stafford Loan, the government pays the loan's interest while the student is in school at least half-time. These loans are based on family need. Unsubsidized Stafford Loans are made to students no matter what their family's need or income level. The federal loan program also includes options for parents.

• Federal Consolidation Loans: Consolidation loans let borrowers combine separate federal loans into one, which can help stretch out the repayment period -- and eliminate the hassle of making several payments each month. Also, since the repayment period has been extended, monthly payments are typically lowered. However, by extending the term of the loan, the borrower ends up paying more in interest.
• PLUS Loans: PLUS Loans allow parents and graduate students to borrow money up to the cost of education, minus any financial aid. These loans are also offered at a low rate of interest. Financial need isn't an issue, but credit guidelines apply in determining eligibility.