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Financial Aid 101 - Loans

How do I pay for college?

•$16,141 average, in state, 4-year public universities

•$28,130 average, out of state, 4-year public universities

•$36,993 average, 4-year private universities

EVERY YEAR!!

Source: The College Board, Annual Survey of Colleges, 2010

Financial Aid 101 - Loans

What are loans?

• Loans are a form of financial aid that many students use to

help meet the cost of attendance with is not covered by

their scholarship and grant awards and personal resources.

• Unlike grants and scholarships, loans accrue interest and

must be repaid.

• Payment on most college loans may be deferred until after

graduation, and occasionally even for a time after

graduation if your student stays in close contact with the

school and explains the need to defer.

Financial Aid 101 – Types of Loans

Federal Loans

•Federal student loan programs offer favorable terms reserved for students.

• Interest rates are lower than typical consumer rates and you may have an interest-free grace period before repayment begins.

Private Loans

• Interest charged on this loan is determined by the lender

•The lender determines eligibility for this type of loan.

•Length of repayment depends on amount owed and type of repayment plan selected with the lender.

Before turning to student loans, make sure that you have exhausted the

"free money" part of the award - namely, scholarships and grants - and family's allocated savings, investments or income to pay for college

expenses. – Simple Tuition

Loans available to students and parents may be divided into two types:

Financial Aid 101 – Federal Loans

Federal Loans

Federal Direct Loans

(to students)

Federal Direct PLUS Loans

(to parents)

Perkins Loans Stafford Loans

• Students should always start with the federally-backed or funded

loan types - such as Perkins, Stafford/Direct Loans, and PLUS loans

for parents.

• All of these loans have fixed interest rates and lower (or no) credit

score qualifications for borrowers.

• Most of these loans have limits and may be harder to qualify.

Financial Aid 101 – Private Loans

• If you were turned down by PLUS loan and your student doesn’t

qualify for other federal loans, you still have options.

• Private lenders offer many loans that can help you with your

college education. Most carry higher rates than government loans,

but lower than other types of consumer borrowing.

• Some private loans offer better flexibility and are easier to qualify.

• University financial aid office may offer you a list of the school’s

preferred lenders. Ask your financial aid officer to explain the

features of the loans each of these lenders offer, but don’t limit

yourself to the banks on the list.

Some of the Top Private Lenders*

Sallie Mae

$20.990 billion

Citi Student Loans

$5.870 billion

Wachovia Education

Finance Inc.

$5.540 billion

Wells Fargo Education

Financial Services

$5.147 billion

Bank of America

$4.921 billion

*Listed by origination volume, data accurate as March 5, 2010

You have questions, we have answers!

College Parents of America and get more tips and advice on:

How to choose private loans for students and parents;

How to select a co-signer;

How the private loan application process works; and Much More…

For more information, please contact us the following ways:

www.CollegeParents.org

888-761-6702