Understanding Your Loan Options

Borrowing too much at high interest rates could cause you ____________

tons of headaches after school and thousands of dollars.

Once you have a plan to responsibly pay for school you can __________

worry less about money and focus on academics

After you've exhausted your federal loan options, know that ____________

you can look to private lenders to help finance your education.

To learn more about federal loan features, you can talk to ______________

your federal loan servicer

There are a number of other benefits to some federal loans. What are they?

-The interest may be tax deductible -Federal repayment plans may be more flexible or forgiving than other loan products -loan consolidation could make repayment easier.

Another federal loan is the Perkins Loan. What is that?

-This loan option may appear on your award letter if you demonstrate financial need. -your school becomes the lender and you make payments back to them -Interest is subsidized which saves you money while you're in school.

Smart borrowers

-look closely at interest rates, as compounding interest can greatly increase the cost of a loan. -maximize their scholarships, grants, and work-study opportunities first. -only borrow what they need and never use student loans to cover non-educational or cost-of-living expenses. -Accept subsidized loans options as their first choice of loan -Responsibly borrow federal unsubsidized loans as next option. -Look to private loans as a final option -Borrow with a plan to repay their loans -Create a loan repayment strategy before repayment begins

What are a few differences between the Direct Plus Loan and the other federal loans?

-no credit check is required for other direct loans, but a PLUS loan requires a credit check and those with an adverse credit history may be denied. -While other federal loans have annual limits to how much you can borrow, those who take PLUS Loans can borrow up to the Cost of Attendance minus other aid received. -PLUS Loans, for parents, enter repayment as soon as the loan is made rather than after you finish school. -For graduate and professional students, payments are deferred while you are in school.

Direct Unsubsidized Loans

-not need-based -the borrower is responsible for paying all the interest that accrues on the loans. -Interest starts accruing just after the loan is made.

Direct Subsidized Loans

-offered to borrower who show a financial need based on data from their FAFSA -Department of Education pays the interest that accrues while borrowers are in school. That's a HUGE PLUS because interest that accrues while you're in school can get pricey.

private loans

-private loans are offered by banks and lenders -often have higher interest rates and fewer repayment options than federal loans.

Student borrowers are not required to __________

-start repayment on any Direct loans until after they've left school -BUT any accrued interest will capitalize when the loans go into repayment (meaning the interest will be added to your loan amount).

Final type of federal loan you might see on your award letter is the Direct PLUS Loan

-type of loan for parents of dependent undergraduate students and graduate and professional degree students. -not need-based, so even those with higher incomes may be eligible.

ALL these loans have to be paid back with

Interest!!!

on your award letter you may have been awarded a federal Direct loan. What is that?

The two most common types of federal loan are: -Direct Subsidized Loans -Direct Unsubsidized Loans