Student Loans
Click each of the 5 parts under “How Financial Aid Works”
https://studentaid.gov/
1. What are three things you learned or found helpful?
- Start planning financial aid as early as you can
- Some schools and states use your FAFSA form to determine if you qualify for grants,
scholarships, and loans.
- It is important to check the amount of debt you would be taking on at the schools you are
considering.
2. What do you think was the most important part of this?
- It helps us figure out how financial aid works by getting us on track
Use this link to answer questions 3-4
3. What is the current subsidized federal loan interest rate?
6.53%
4. What is the current unsubsidized federal loan interest rate?
8.08%
5. Explain what a subsidized federal loan is
A federal student loan for undergraduate students with financial need, which is determined by
the FAFSA, where the government pays the interest while the student is in school at least
half-time, during grace periods, or during deferment.
6. Why would someone qualify for a subsidized federal loan?
They would qualify if they are an undergraduate student with financial need.
7. What is a benefit of having a subsidized federal loan?
The government covers the interest while you are in school and during your grace period.
8. Explain what an unsubsidized federal loan is
A type of student loan available to both undergraduate and graduate students, regardless of
financial need, where the borrower is responsible for paying the interest from the moment it is
disbursed.
9. Who qualifies for an unsubsidized federal loan?
Anyone who is a U.S. citizen, or eligible non-citizen, enrolled at least half-time in an eligible
degree or certificate program at a school participating in the Direct Loan Program, and not be in
default on any federal student loans.
Use this link to answer question 10
10.What is the current PLUS loan interest rate?
9.08%
11.Explain what a PLUS loan is
A federal loan that parents of dependent undergraduate students, and graduate or professional
students, can use to help pay for college or career school expenses not covered by other
financial aid.
12.Who offers private loans?
Private loans are made by private organizations such as banks, credit unions, and state-based
or state-affiliated organizations, and have terms and conditions that are set by the lender.
13.You are paying a private loan at a 10% interest rate. The rates have now dropped to 6%.
You have a “good” credit score of 710. What is a good option to pursue to lower your
current interest payment? Hint - People do it with mortgages often!
Refinancing the loan to a new loan with a lower interest rate
For the questions 14-15, pretend you’re going to college and need to take a loan
14.Which specific loan type would you prefer to have? Why?
I would prefer a subsidized loan. The government covers the interest while I’m in school and
during deferment periods.
15.What are some options to consider if you have a very limited budget for college?
- Community college first
- Apply for Grants & Scholarships
- Live at home
- Choose a state school
- Look into tuition-free or low-cost programs
16.Loans can stack up. Student loans, car loans, mortgages, credit cards, etc. Answer the
following questions:
a. How does understanding your budget benefit you in this case? Think 50-30-20
Understanding the 50-30-20 rule helps me stay financially stable while managing multiple loans.
b. Everything has a priority. What loans that you may get in the future are most important?
Least important?
Most important: Mortgage, Student Loans, Car Loan
Least Important: Private Student Loans, Credit Cards, Personal Loans for non-essentials
c. What sacrifices are you willing to make to afford your loans?
Living below my means, delaying big purchases, side hustles & extra income, cutting
unnecessary expenses
d. Do you plan on taking loans in the future? Explain
I would only take loans if they are strategic and help me build long-term wealth. A mortgage is
likely if I buy a house, even though I would go for a large down payment to reduce debt. If I
need a car, I would go for a used vehicle with manageable payments. I would avoid credit card
debt and only take student loans if they are necessary.
