If you're just starting to look into financial aid, you may be wondering what's so special about federal loans—after all, you have pay them back with interest, right? (Yep, that's right!)

So, what makes a federal loan different from any other loan? Should you even bother with the financial aid paperwork? Well, since it's time to fill out the FAFSA (Free Application for Federal Student Aid) for next school year, now is a good time to discuss it.

We always recommend that students max out their federal student loan options before looking to private student loans. Why? Here are a few of the reasons to look to federal student loans first:

1. Interest is often lower than other loans. Now it's true, you do have to pay back federal loans, and you do have to pay interest. However, the interest rate on federal loans is fixed, and the private loans typically have variable rates. Generally speaking, the government sets interest rates on federal loans lower than what you'll find on private loans.
   
   
2. You may qualify for a subsidy. If you meet the federal financial guidelines, you may qualify for a subsidized Federal Stafford Loan, which means the government pays the interest while you're in school. This can save you a fair amount of money, and it's a benefit you'll only find on federal loans.
   
   
3. You don't need a credit history  or a cosigner. Even if you've never borrowed money, paid a bill or held a job, you can borrow a Federal Stafford Loan on your own. Most private loans require that you have a good credit history and a certain income level, or you'll need a cosigner on the loan with you.
   
   
4. You have a lot of options for repayment . When it comes time to repay federal student loans, there are different payment plans available. If you're having trouble making the standard monthly payments, you can adjust your payment plan to make income-sensitive payments or graduated payments (including an interest-only option). With private loans, you may be able to work out a special payment plan with your lender, but you're not entitled to it.
   
   
5. You're entitled to postpone payment under special circumstances. With a federal loan, you're allowed to temporarily postpone (or "defer") your student loan payments if you meet certain requirements. Again, you can request to postpone payment of private loans as well, but you're not entitled to do so based on your circumstances. It's up to your lender whether they'll allow it.

The idea here is that federal student loans have some built-in protections to help students borrow AND successfully repay their federal loans.

These facts don't cover the whole story on federal loans, but if you're looking at your college-financing options for next year, these are some critical points to consider that make federal loans unique.

Will you be taking out a federal loan to pay for college? Why or why not?