Despite the fact that federal student loan interest rates have dropped to a new low, financial aid administrators continue to recommend students use loans only as a last resort.

"We ask the student exhaust all other alternatives first. They can apply for financial aid, scholarships or earn money through the work-study program," said John Bradbury, the associate director of the financial aid and scholarship office. The federal work-study program provides financial assistance through employment. Pay rates range from $6.75 to $12 an hour.

"We don't encourage or push students to take out loans at all," Bradbury said.

According to a report released by the U.S. Department of Education, the interest rates currently range from 3.46 percent for subsidized Stafford loans, 4.06 percent for unsubsidized Stafford Loans, and 4.86 percent for Plus loans.

The subsidized Stafford loan allows students who are eligible, based on need, to borrow funds. The student must, at minimum, attend school part time. While the student is in school the government pays the interest on the loan. Repayment begins six months after graduation or after the student attends school less than part time.

The unsubsidized Stafford loan does not require the student to prove financial need, and the interest does not accrue on the loan while the student is in school. With the unsubsidized Stafford loan, there is also an option to defer payment while in school.

The Plus loan program is designed for parents of dependent undergraduate students to borrow funds.

"Independent loan companies offer interest rates that are higher," Bradbury said. Official company Web sites show Wells Fargo's education connection career loan's lowest annual percentage interest rate as 4.75 percent, Bank of America's undergraduate loans at 5.4 percent, and Sallie Mae's interest rate as high as 6.79 percent. All of these loans include other interest fees and charges.

Because the Stafford and Plus loans are guaranteed by the federal government, banks are willing to take a lower interest rate, Bradbury said. If a person can't pay for a loan, the federal government will pay their loan for them.

"But the federal government will do horrible things to you, like destroying your credit and garnishing your wages," Bradbury said.

Rebecca Stern, an undeclared freshman, showed concern over debts. "I would hate to borrow money in the first place. I'd be really worried I couldn't pay it back for some reason," said Stern.

In order to get a loan, a student must sign a master promissory note and participate in the entrance and exit loan counseling, each session taking an hour. Some topics that are discussed during the entrance and exit loan counseling are the rights and responsibilities of the person taking out the loan, comparing the amount of money being borrowed to the amount of money being paid back, realistic payments and the importance of credit ratings and reports.

Frederick Basgal, a computer science junior, wants to make sure he is getting the most for his money.

"I don't have a student loan right now, but I'm receiving financial aid. If I had to borrow money, I would be sure to get the lowest interest rate," Basgal said.

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