Say Hello To Federal Student Loans

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  • You’ve heard of loans, and some of you may have to take some if you haven’t already. It’s a personal decision to make and I want you to have an informed view before thinking twice about taking them out- or not taking them out.
  • What are loans?
    • Money that you borrow and pay with interest.
    • Student loans can be government, college or private.
      • Federal and state loans are available.
      • Community, state or private colleges also offer loans to students.
      • Banks, organizations, companies, or family are other resources.
    • Can have conditions.
      • Must be paid by…
      • Will be given out in this amount this many times…
  • Today I want to talk about a specific type of loan, the one that after much research, I have concluded is the safest option.
  • Focus: Federal Loans
    • Money from the government for you to attend school.
    • Different Types of these federal loans exist.
  • How much can I borrow?
    • Undergraduate students can get a varying amount of aid.
      • From $5,500 to $12,500 per year, depending on what year you are in school and
      • your dependency status.
    • Graduate or professional student also gets a varying amount of aid.
      • This number can be up to $20,500 each year.
    • Student aid by year is determined by financial need and dependency status of the parents.
      • Some loans that are subsidized can be reduced by thousands like 12,000 minus 5,000.
      • First years can access less money as opposed to multiyear students.
      • Dependent students access less than the independent students do.
      • This chart goes on after this data set, it goes over the larger sums that graduates and professional students get which aren’t subsidized.
    • Why a federal loan instead of others?
      • The interest rate on federal student loans is fixed: 5.05% annually.
      • No credit check or cosigner like some loans.
      • You don’t have to repay until after you leave college or drop below half-time (6 credits).
      • If you are making $30,000 or less, you won’t gain interest while you are in school and 10 months after you graduate.
    • Interest rates based on the situation. This chart illustrates the intrest rates of each type of loan depending on the situation of the student.
  • How do I get a federal loan?
    1. First, complete and submit a Free Application for Federal Student Aid(FAFSA®) form.
      1. Based on the results of your FAFSA form, your college will send you a financial aid offer, which may include federal student loans.
    2. Before you receive your loan funds,
      1. you will be required to complete entrance counseling.
      2. You will sign a Master Promissory Note, agreeing to the terms of the loan.
  • Maybe this information alone is enough to give you what you need to make a decision, but there’s more to consider.
  • Is it worth it?
    • Graduates are on average $26,000 in debt.
    • Federal Student loans don’t start accumulating interest until 10 months after graduating.
    • Loans are expected to be paid within time-frames such as within 10 years.
    • A debt of $26,000 that’s expected to be paid within 10 years can be split up into monthly payments of $350.
  • That should be easy since you have a good job that the loan paid for.
    • Of course, this may not be the case for everyone.
      • You should only take out a loan IF you know you’ll be able to pay it back.
      • Don’t fall into a pit of debt.
      • Take a look at your existing credit
        • How old is your credit history?
        • How many credit accounts do you have?
  • How many hard inquiries have you been exposed to?
  • Look into other options for the sake of monetary safety.
  • Personal loans from family might be an option if you’re lucky.

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