Financing Higher Education

FAFSAFree Application for Federal Student

Aid

The main form students use to apply for Federal education grants and loans

FAFSAThe amount of money a student is

given or loaned depends on: Family income Marital status The school you are planning on going to

Federal student loans

These loans are offered directly to students by the government

Interest rates are lower that interest rates on other types of loans.

Federal Student loans are awarded based on Financial need.

Grants and ScholarshipsAre given to students to help pay for

their education and do not have to be repaid.

Student must apply for Grants and Scholarships.

Grants and ScholarshipsSchools and organizations award

Grants and Scholarships based on:MeritFinancial needboth

Private Student Loans

Financed by private companies rather than the government

Private loans usually cost more than federal loans

Private Student Loans

Most people apply for Private Student loans when their education cost more than: Their federal student loans Grants Scholarships And work study

Can cover

Bad DebtDebt that is used to pay for

something that will lose valueExamples of Bad Debt

TVCar

To lessen the value or price of something

To increase the value or price of something

Depreciate and Appreciate

Good DebtExamples

Higher EducationHouse

Five steps to the Student Loan life cycle

ResearchApplySelectStudyRepay

Three types of Federal Loans

StaffordPerkinsPlusWhat type of Federal loan is for

parents and not students?Plus

Federal Student LoansFederal Student loans do not require

___________ ______________ or __________.

Credit checkcollateral

Federal Student LoansThe___________ ______________

__________ ____________ by the Federal Reserve Bank

Federal Funds Interest Rate

Stafford LoansMost common type of student loan.

They are available to undergraduate and graduate students

Features of a Stafford Loan

You are not expected to make payments while in school

You have a six month grace period when you finish school before you have to start making payments

Interest rate stays the same, it will not change.

Perkins Loans Have a set 5% interest rate and a

10 year repayment period Intended for students with

exceptional financial need.

Private Loans Better than a credit card You do not have to make payments

until you are done with school Advertise low rates, but they are

actually based on your credit score. You do not know your rate till you

apply You should research the range of

rates and fees before you apply

Cost of Attendance Tuition and Fees The amount you can expect

from grants and scholarships

Room and Board Cost of living in the area

DatesWhat is the earliest date you can send in

your FAFSA application?

January 1

Federal Student LoanYour Federal Student loan will have a _________ interest rate

Fixed

Private LoansThe more you accept in private loans, the less federal aid you qualify for.

Be careful, this goes for some scholarships too.

Subsidized LoansThe government pays the interest on these loans while you are in school

Subsidized loans are awarded to students with more financial need.

Unsubsidized LoansInterest is not paid by the

government. Students do not have to make

payments on the interest while in school, but may do so if they want.

Cost of AttendanceTuition and Fees Books and SuppliesHousing and meal plansPersonal Expenses

Promissory NotesA Master Promissory Note is a

____________

contract

Repayment ScheduleWhat you owe each monthWhen payments are dueHow long it will take you to pay off your loan in full

Grace Period(for student loans)

Usually begins when you leave school, and begins 6 months after you leave

Allows you time to find a job.

Financial HardshipRequest a lower monthly payment

Request a forbearance

Consolidation Another company pays the full

amount of your loanYou then repay that companyYou only have one loan payment to

makeYour interest rate will stay the same,

but your monthly payment will decrease

Your grace period ends

DefermentYour lender allows you to stop making payments if you go back for a higher degree.