if you teach or work with high school juniors or seniors, chances are you hear a lot of buzz from your students about going to college—including paying for college.
we’ve put together this comprehensive but to-the-point guide that you share directly with your students and families, or reference personally if your students come to you directly with questions.
we encourage you to share the magoosh guide to paying for college as well as the guide to college admissions, which includes some financial aid information as well.
we also love this overview of types of student loans as well as this thorough guide to choosing the right students loans for you.
to learn more about the different types of student loans out there, read on!
federal student loans are sums of money lent to a student by the united states government. they must be paid back in full, with interest.
to apply for federal loans, students must fill out a fafsa form (you can direct them to our guide to completing the fafsa application) and they’ll be awarded government grants and loans in financial aid award letters from each college or university they apply to.
direct subsidized loans
direct subsidized loans are available to undergraduate students who can prove financial need. financial need is determined by a student’s “efc” (expected family contribution, based on parents’ previous tax returns).the maximum amount a student can take out varies between $5,000-$12,000 per school year, depending on their dependency status.
direct unsubsidized loans
direct unsubsidized loans are available to undergraduate, graduate, and professional students. eligibility is not based on financial need. much like direct subsidized loans, the maximum amount a student can take out is $5,000-$12,000 per school year, based on whether they can be claimed as dependents on their parents’ or guardians’ tax returns.
direct plus loans
direct plus loans are given to graduate students, professional students, and parents of dependent undergraduate students. while your rising college freshman may not be eligible to take out these loans in their own names, their parents may be interested in doing so. direct plus loans can be used to pay for any portion of college expenses that are not cover other financial aid and do not require proof of financial need. however, they do require a credit check, which may make them harder to obtain.
graduate and professional students can borrow up to $20,5000 per school year. parents of undergraduate students can borrow the remaining portion of college costs not covered by other financial aid.
direct consolidation loans
basically, direct consolidation loans are just a combination of all of one’s federal student loans rolled into one loan by a loan servicer. loan servicers are companies that handle the distribution and payment of federal student loans. they may be private companies, but the loans themselves are still federal loans.
benefits:
drawbacks:
private student loans are loans granted by private institutions not affiliated with the u.s. government. many students end up taking out both federal and private loans to cover the entirety of their college expenses.
examples of private loan lenders include:
if your students are searching for private loans, they should definitely shop around and weigh their options. this is an excellent overview of the 15 best private student loans for 2020.
benefits:
drawbacks:
when a student (or their family) is looking into a particular loan, here are some key questions they should ask about the loan:
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students and their families should be encouraged to seek out as much information as possible and weigh their options carefully. urge your students and families to speak directly to each college’s financial aid office, as well as directly to the potential lenders.
remember, as a teacher, counselor, or administrator, you don’t have to be the authority on student loans, but it always helps if you can’t point them in the right direction!