Financial Literacy Student Loans Review

FAFSA determines

student's eligibility for federal student aid programs the expected family contribution specific federal student aid programs which the student qualifies for state or institutional aid

problem-common scams

-Charge fee but never rewarded -Charge a fee and guarantee you a scholarship -Ask to send a redemption fee or check to cover your taxes before the prize can be disbursed.

Standard Plan

-Fixed monthly payments based on total loans borrowed -Up to 10 years to pay off -Minimum of $50 a month

graduated plan

-Lower initial payments •Increase usually every two years •Payment must at least cover interest -Must be paid in full within 10 years

extended plan

-Must have more than $30,000 in loan debt -Must be paid in full within 25 years

Income contingent plan

-Payment based on: •Annual family income •Family size •Amount of Loan debt -Up to 25 years to repay

False

Scholarships are only available to students who meet high academic and high financial need criteria?

student

Student Loan is money that you as a __________ borrow.

Must; whether

Students loans ________ repaid with interest_______ you finish your education.

deferment

Temporary postponement of your student loan payments. Interest will NOT accrue on subsidized loans in deferment but will accrue on other types of loans.

-Financial Need -The cost of attending the institution -Whether the student is full or part-time -Whether the recipient plans to attend the institution year-round

The amount of the Federal Pell Grant is dependent on what four things?

FAFSA (Free Application for Federal Student Aid)

The application required for students to be considered for federal student financial aid or a grant

Your grade level and not how many years you have attended

What are Direct Loan amounts based on?

ECU Foundation civic or religious organizations local businesses parents' employers indian tribes

What are the ECU sources of scholarships?

-Unemployment -In-school (for those enrolled at least half-time) -Economic hardship. -Military deferment is, generally speaking, for a borrower already in active or reserve duty who is deployed; simply enlisting does not qualify.

What are the four most common deferments?

read application carefully keep copy of each application pay special attention for essays, academic transcripts, and letters of recommendation

What are the three things to remember when applying for scholarships?

A federal grant offered for post-secondary education. Pell grants are awarded based on financial need, as determined by information on the FAFSA.

What is a pell grant?

$31,000

What is the lifetime maximum a dependent student cannot exceed?

$57,500

What is the lifetime maximum an Independent student cannot exceed?

Your lender

Who do you contact if you cannot make your payment?

borrower

Who is responsible for paying the interest that accrued while the borrower is in college on a federal unsubsidized Stafford or federal grad plus loan?

Federal Government

Who pays the Interest on a federal subsidized Stafford direct loans while the borrower is attending college at least half-time as well as during the grace period or authorized deferment?

principal

________ is the amount borrowed from a lender before interest.

interest rate

________ is the rate at which the borrower is charged by the lender for the use of the money

Origination Fee

_____________ is the loan processing fee charged to a borrower

repayment plan

a plan set up and agreed upon between a borrower and creditor that outlines how a loan will be paid back.

•Based on financial need, as determined by FAFSA

Federal Work Study Program is based on what?

no, can be on or off campus

Federal Work Study must take place on Campus?

default

Federal loans enter default status once the delinquency reaches 270 days in a monthly repayment schedule. Private student loans may default much sooner.

-Dependent Student: $5,500 per year -Independent Student: $9,500 per year ($3,500 from subsidized)

How Much can I borrow Grade level I?

•Apply for Work-Study •Find a part-time job •Find outside sources of funding

How can I reduce borrowing?

•Pay must be at least minimum wage •Pay based on complexity of the job and duration of the position •Undergraduate paid by the hour •Must pay at least once a month and must pay students directly

How do federal work study wages work?

First time recipients are eligible to receive up to 9 annual Pell Grant awards over their lifetimes.

How many times are you eligible to receive a pell grant?

-Dependent Student: $7,500 per year -Independent Student: $12,500 per year ($5,500 from subsidized)

How much can I borrow Grade level 3 and 4?

-Dependent Student: $6,500 per year -Independent Student: $10,500 per year ($4,500 from subsidized)

How much can I borrow? Grade level II?

FASFA and application

Institutional -ECU Scholarships must complete which 2 forms?

•Your loan could go into default: -Entire balance owed is due immediately, no more monthly payments -Can ruin your credit -They can take your federal tax refund as well as garnish your wages -The amount you owe increases dramatically -Lose eligibility for financial aid

Name the penalties associated with not repaying a student loan

True

A grant is considered a "gift aid" which means it does not need to be repaid by the student?

Grant

A monetary award given to a student to help pay college expenses. Grants are usually not repaid by the student. usually need based

forbearance

A temporary postponement or reduction of loan payments

Master Promissory Note (MPN)

A.Used by Federal Stafford and Plus Loan programs b. Permits a borrower to receive multiple loans over multiple academic years from a single signed note.

10%

According to Financial experts you need to keep your monthly payment below what percent of your future salary?

US Department of Education

Direct Loans are loans made directly by the ___________ to students and parents to help pay for higher education.

NO CHARGE

Does it cost to complete the FAFSA?

The state

FAFSA is an application required by

delinquency

failure to make installment payments on a loan by the scheduled due date

types of scholarships

federal state institutional community organizations

Scholarship

financial aid award given to finance education does not have to be repaid can be merit-based or based on financial need

Unsubsidized Loans

type of federal student loan which government does not pay the interest while student is in school.

subsidized loans

type of federal student loan which the government pays the interest that accrues while student is in school.

•What are my tuition and book costs? •What do I have in grants and scholarships? •How much will I need for the whole year? •How much CAN I borrow for a year? •How much SHOULD I borrow? •What will my monthly payment be when I start repaying my loans?

what are the things to consider before borrowing?

•Nearly impossible to discharge student loans in a bankruptcy •Have to prove that repaying loans will cause undue hardship -Very difficult to prove given the repayment options available

what happens if you file bankruptcy?

Explains the responsibilities of a federal student loan borrower

what is a master promissory note?