Unit 3: Paying for College

What is the average amount of student debt for college graduates?

$31,100

What are two common methods used to inform your school of which financial aid you'll be accepting?

1. Entering the amounts of financial aid you're accepting into an electronic form and submitting it to the school 2. Signing a paper aid offer and mailing it back to the school

About what percent of FAFSA forms are selected for verification?

30%

Interest rate for Undergraduate Direct Loans

4.99%

Interest rate for Direct Unsubsidized Loans for Graduates/Professionals

6.54%

What percentage of students receive scholarships or grants for college?

63%

Interest rate for Direct Plus Loans:

7.54%

Promissory note

A signed document containing a written promise to pay student loans back.

What happens if the FAFSA has been selected for verification?

Colleges have flagged the FAFSA file and need to conduct further information on it in order to ensure that it was filled out correctly

Who uses the FAFSA once you have submitted it?

Colleges, State government, Federal government

What is the main difference between direct costs and indirect costs of attending college?

Direct costs are paid directly to the college (tuition, fees), while indirect costs are educational costs not paid directly to the college (textbooks, transportation)

True or False: Your parent/guardian can use your FSA ID to submit any information for your FAFSA application.

False

What are the three types of money you should use when paying for college?

Free money, your money, and borrowed money

Who qualifies for a Direct Plus Loan?

Graduate students, parents of a college student

Difference between grants and scholarships

Grants are typically offered to individuals in need of financial aid, unlike mainly merit-based scholarships

You have more control over ______ costs.

Indirect

Is the net price of college usually higher or lower than its sticker price?

Lower

Net Price of College

Price for tuition + fees, - grants, scholarships, & education tax benefits

What is the purpose of the FAFSA?

Provides access to financial aid from the Federal government and is used to determine how much financial aid should be offered to you.

Why should you accept scholarships and grants before other types of financial aid?

Scholarships and grants help pay your tuition and do not need to be paid back later on.

Sticker price of college

The advertised price of the college

What is Expected Family Contribution (EFC)?

The amount of money a student's family must pay for their college tuition (based on income + assets)

Who is responsible for paying all of the interest on a Direct Unsubsidized Loan?

The borrower

Who pays the interest on a Direct Subsidized Loan while a student is in school?

The government

Amount of need based aid =

Total cost of attendance - EFC

Function of deferment and forbearance

Used to delay a student's loan payments

At what point are you no longer eligible to receive Direct Subsidized loans?

When you go into graduate school/become a professional

What do you receive after you submit the FAFSA?

Your Student Aid Report (SAR)

What is the benefit of having a fixed interest rate?

Your interest rate stays the same, therefore, the amount of interest you pay stays the same

What percentage of student loan borrowers have LESS than $60,000 in debt?

~7%