Higher Education
What is a loan forgiveness program?
A program that reduces or wipes away the amount of your loan if you are eligible
Standard Repayment Plan
federal student loans is a 10-year repayment plan with fixed payments. That means you pay the same amount every month for 10 years.
The biggest difference between scholarships and loans is that scholarships are considered _____ but loans must be paid back.
free money
Which type of loan has a higher borrowing limit, a subsidized or unsubsidized loan?
unsubsidized loan
What do you need to complete in order to qualify for a federal student loan?
FAFSA
Higher education typically has a positive return on investment because _____.
jobs and careers that require a degree or certificate generally earn higher salaries
Origination Fee
percentage of the loan amount
Graduated Repayment Plan
plan for federal student loans is a 10-year repayment plan with payments that start out lower and increase every 2 years.
What do you need to submit in order to access need-based federal aid and federal loans?
FAFSA
Extended Repayment Plan
extended repayment plan for federal student loans lets you extend your repayment timeline for up to 25 years. Payments are lower each month, but you'll pay a lot more in interest over time.
Private student loans are from _____.
financial institutions like banks and credit unions
If you are looking for information about financial aid at many different institutes of higher education, who should you contact?
high school counselor
Which of the following is true about financial aid letters from institutes of higher education?
They only include aid for one year. You must reapply for financial aid every year.
How often do you need to fill out the FAFSA in order to apply for federal student loans?
every year
When do you need to apply for a federal student loan?
every year, based on the deadline for your state
Who is most likely to have general information about financial aid at many different institutes of higher education?
high school counselor
The shorter a loan's term, the _____.
higher the monthly payment, but less interest paid over the life of the loan
Expected Family Contribution (EFC)
how much the federal government expects your family will be able to contribute per year toward your school expenses
Researching the average earnings by major and by career can help you determine the _____ of an institute of higher education. sticker price
return on investment
If you calculate the cost of attendance (COA) at an institute of higher education, what are you including?
room and board, books, supplies and other expenses.
Free money
scholarships and grants
Which of the following should you consider first when trying to pay for higher education?
scholarships and grants
Which person at your school would most likely have up-to-date information about scholarship opportunities?
school counselors
situations where you may be eligible for deferment with federal loans.
school-related, economic hardship, military, health-related
The FAFSA asks you to list the higher education institutions you will apply to because the federal government will _____.
send your student aid report directly to them
Why would you need a cosigner for certain student loans?
if you don't have a credit history, A cosigner's credit score will be used to secure those loans.
When creating a budget to repay your student loans, you should plan to pay back _____.
interest and principal
Federal Loans
- FAFSA - no importance in credit score - fixed interest rate - apply each year - small fee - no pay back in school - ten years to pay after graduate - origination fee
How does a loan default impact you?
- impacts ability to borrow since it lowers your credit score - ability to rent - cosigner is impacted too
50/30/20 rule
50% needs, 30% wants, 20% savings
The _____ is the additional costs you pay each year in order to borrow money in loans, including both interest and fees.
Annual Percentage Rate (APR)
To access need-based federal aid, including federal loans you will need to submit _____.
FAFSA
Subsidized loans are different from other types of loans because they _____.
are based on financial need
Federal Subsidized Loan interest?
changes each year
If a school is offering a lot in financial aid, what else do you need to consider when trying to determine if a school is going to fit your budget?
cost of attendance (COA)
Scholarships awarded for high GPAs or test scores are based on _____. financial need
merit
One consequence for defaulting on a loan is to have your wages garnished. What does this mean?
money is taken directly out of your paycheck to cover your debt
Scholarships, grants and work-study money all reduce the _____ of higher education.
net cost
Why are net costs of higher education different from sticker prices?
net costs include all scholarships, grants and special program funding
If your earning potential is higher than the cost of your higher education, you will have a _____.
positive return on investment for higher education
Which type of loan is based on financial need?
subsidized loans
The full cost of attendance to an institute of higher education, including tuition, room and board, books and other costs is known as _____.
the sticker price
If you default a loan,
there's loan acceleration, wage garnishment, ineligible for aid, withheld transcript, withheld tax refund, court case
Savings
20% of your money should be aimed towards saving for the future and emergencies
Wants
30% of your money can go towards wants. nice things, vacations, new shoes, going out to eat
Public Universities
- funded in part by the state they're located in, and tuition - charge less for students in state and more for out of state - tuition discounts for those nearby - four years -bachelor's degree - large range of programs and majors
Community Colleges
- funded mostly by a mix of state funding and tuition - don't have on-campus housing - two years and earn an associate's degree - large range of programs and majors but they're less than others
Private Universities
- funded mostly by endowments, financial donations, tuition costs - charge the same tuition for everyone - four years -bachelor's degree - large range of programs and majors
Certificate Program
- give students mastery over a specific area in many trades - last from under a year to two years - students earn a trade certificate when they finish -help get into specific jobs in trade
grants
- usually awarded based on financial need - come from federal or state gov. or future educational institution
CSS
College Scholarship Service
When applying for the FAFSA, which of the following is not true?
every state has its own deadline
Private Loans
- importance in credit score, impacts - take a loan offered by financial institution - take out the loan with a parent or guardian cosigner - You can get fixed interest rates or variable - different options for how you repay your loan, including paying while you're in school or deferring payments until after you graduate -choose from different options for how long you want to pay back the loan (5-15) - generally no origination fee
Unsubsidized Loans
- not based on financial needs - have higher limits - hit subsidized loan limit you can take an unsubsidized loan - accrue interest even while in school - you don't have to pay while you're enrolled, can wait until you graduate - pay interest during school - pay an origination fee on federal loans - pay back six months after you graduate, leave school, or enroll less than half time
scholarships
- usually awarded for merit - come from future higher institutions or private sources - some have conditions
Subsidized Loans
-based on financial need - have a limit on how much you can borrow - while enrolled at least half time, interest doesn't accrue - Department of Education pays until graduate - pay an origination fee on federal loans - pay back six months after you graduate, leave school, or enroll less than half time
Needs
50% of your money should be spent on needs like food, shelter, clothes and necessary payments like loans
What happens when you refinance a student loan?
A lender pays off your existing loan and offers a new loan with a different interest rate payment schedule and terms
What is a parent loan?
A loan that is taken out for your education by a parent or guardian and they are responsible for paying it back.
What is considered by the federal government to be what your family will be able to pay per year toward your school expenses?
Expected Family Contribution (EFC)
Which statement best describes how federal student loans are different than private student loans?
Federal loans always have a fixed interest rate and you qualify regardless of your credit score
Which type of interest does not change over the life of a loan?
Fixed Interest
FAFSA
Free Application for Federal Student Aid -need to apply the year before attending and must fill it out every year -applications usually open Oct 1
When you sign a loan contract, you're legally obligated to pay it back.
If you miss a payment, you're considered a delinquent and if you stop paying for more than nine months on a federal loan its defaulting.
If you are a dependent of a parent or caregiver, what will you need from them to complete the FAFSA?
Information about their income and taxes
What's the best advice to give to a student who says: "It's easy to determine which school is more affordable; just look at how much financial aid they give you!"
Not true! Financial aid offers have to be subtracted from a school's cost of attendance to determine how affordable a school is.
Researching the average earnings by major and by career can help you determine the _____ of an institute of higher education.
Return on investment
Can you defer private loans?
Sometimes, if you return to school or for medical residency or an intership
Why would finding graduation rates be helpful in determining an institution's return on investment?
Taking more than four year to graduate will increase costs and may impact your ROI
What is a sticker price for higher education?
The price of attendance including tuition, room and board, books and other costs
Which is something not to consider when trying to get a positive return on investment (ROI) for higher education?
The type of food that that is offered in a meal plan
How can attending a community college help create a positive return on investment for higher education?
You spend less money the first two years and then transfer to a 4 year institution
Which of the following is not true if you default on a student loan?
You will have your passport taken away
What is an origination fee on a loan?
a fee that is charged by a lender to make up for the cost they spend giving you the loan
For student loans that require a cosigner, who is that person?
a parent or guardian who shares the responsibility of the loan with you
Which of the following is an example of how high student loan debt can impact a person's life decisions?
a person may choose to use public transportation instead of buying a car since they can't afford a down payment
What do you need to consider to decide if you can afford to go to an institute of higher education?
cost of attendance and financial aid
If Alejandro wants to pay off his student loan by basing it on how much he is earning at his job after graduation, what type of repayment plan is best for him?
income-driven payment plan
Which method of funding higher education accrues interest until it is paid back?
loans
Why is it important to consider loans last when paying for higher education?
loans need to be paid back, scholarships and grants are free money
Having a high debt-to-income ratio or defaulting on your loan can bring down your credit score. A low credit score on your credit report can _____.
make it harder to borrow money in the future
What can help you estimate how much money you might get in scholarships and grants at a given institution of higher education?
net price calculator
Which is an example of an extended repayment plan for student loans?
payments are low and can last up to 25 years
Which is an example of a graduated repayment plan for student loans?
payments start lower and increase every 2 years
Anna got a high-paying job as a lab technician upon graduation. She took five years to graduate from a public university and did take out a lot of loans. What kind of return on investment (ROI) does Anna demonstrate?
positive ROI
Financial aid letters from institutes of higher education show your yearly aid and costs for attending. This means that you will need to_____.
reapply for aid every year
Income-Driven Repayment Plan
repayment timeline is 20 to 25 years, and you pay a percentage of your income. After that time, the rest of the loan may be forgiven, but there are specific requirements each year to qualify.
Merit
these scholarships could be based on GPA, and honors recognition, athletic, artistic, leadership or community service
Why aren't financial aid programs like work-study and military programs considered free money?
these special programs have requirements to either work or serve in order to receive the money
Why is it necessary to include your family's income and tax information on a FAFSA application?
they are used to calculate your Expected Family Contribution (EFC) which determines your need-based aid
What are two ways that can help you keep a budget while trying to reduce debt load from loans?
tracking expenses and evaluating spending
special programs
work-study , military
The amount of money you will still need after subtracting scholarships, grants, and work study will help determine the amount of money _____.
you need to borrow in loans or pay out of pocket
