STUDENT LOANS 101What every student and parent needs to know about funding higher education.

AVERAGE YEARLY COST: TUITION, FEES, ROOM AND BOARD

(in current dollars)

1983 — Public Institution: $3,433 2013 — Public Institution: $18,110

1983 — Private Institution: $7,7592013 — Private Institution: $36,589

(National Center for Education Statistics)

The Good News Is:You have loan options to ease the financial burden.

STUDENT LOAN OPTIONS: THE BIG PICTURE

There are six (6) types of loans that can be used, some in combination, to whittle down the cost of college tuition and other educational expenses.

1. Direct Subsidized (Stafford) Loans2. Direct Unsubsidized (Stafford) Loans3. Perkins Loans4. PLUS Loans5. State Student Loans6. Private Student Loans

1. DIRECT SUBSIDIZED (STAFFORD) LOANS

• Available for undergraduate students• The U.S. Department of Education

pays some of the interest• Maximum eligibility period is

six (6) years• Maximum loan amount is limited

Pros• Low, fixed interest rate• Flexible repayment options• No credit check to qualify• U.S. Department of Education pays

some loan interest

Cons• Must demonstrate financial need• Available to undergraduates only• Low loan limits — e.g., $5,500 for the

first year• Loan use limited to tuition, books

and housing• Federal filing required

(through a FAFSA application)

2. DIRECT UNSUBSIDIZED (STAFFORD) LOANS

• Available for undergraduate and graduate students

• You are responsible for paying all loan interest

• Maximum eligibility is 3 years• Maximum loan amount is limited

Pros• No requirement to show financial need• Low, fixed interest rate• Payments can be deferred until

after graduation

Cons• You are responsible for all

interest payments• Maximum loan amounts are

limited based on grade level and type of student

3. PERKINS LOANS

• Available for undergraduate and graduate students

• Based on financial need• Loans made by and repaid to

the school• Maximum load amount is limited

Pros• Helps students with exceptional

financial need• Low, fixed interest rate• Available to undergraduate, graduate

and professional students• Available to full-time and part-

time students

Cons• Not all schools participate in the

Federal Perkins Loan Program• Loan amount limited to $5,500 per

year for undergraduates• Loan amount limited to $8,000 per

year for graduate students• Funds limited, so you must apply early

4. PLUS LOANS

• Available for graduate and professional students

• Lender is U.S. Department of Education• Can borrow up to the full cost of

educational expenses• Cannot have an adverse credit history

Pros• Low, fixed interest rate• Can borrow up to the total cost

of education• Available to undergraduates, graduate

students and professional students• Flexible repayment options

Cons• Creditworthiness is a factor• Loan fees are assessed• Parent cannot transfer loan

repayment responsibility to the child

5. STATE STUDENT LOANS

• Useful for supplemental funding• Loan terms vary from state to state

Pros• Helpful for supplementary

financial aid• Some loans offer excellent

repayment terms• Some types of loans are readily

available

Cons• Less flexibility for repayment • Interest rates may be higher

6. PRIVATE STUDENT LOANS

• Useful for supplemental/gap funding• Loan terms vary depending on

the lender

Pros• Loans can cover the total

Cost of Attendance (COA)• Interest rates may be lower,

depending on credit worthiness• Application process easier

Cons• Creditworthiness is a factor• Interest rates usually variable• Borrowers may not be able to

defer repayment

NEXT STEPS

Start investigating your options as soon as possible. The earlier you gather the facts, map out your strategy and start the application process, the more likely you are to obtain the loan(s) you need.

Investigate loan options with:• The school• The school’s state • U.S. Department of Education• Private lenders

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