Student Loan 101
Knowing this helps you make informed financial decisions and manage your debt responsibly.
What is understanding student loans?
These are two main types of federal student loans available to undergraduates.
What are Direct Subsidized Loans and Direct Unsubsidized Loans?
During the time a student is in school, this entity covers the interest on subsidized loans.
What is the federal government?
This is a federal grant that provides financial aid to eligible undergraduate students to help pay for college expenses.
What is the Pell Grant?
Tracking your monthly income and expenses is one of the best tips for managing this aspect of your finances.
What is creating a budget to manage loan payments?
Students should begin doing this as soon as possible, even while still in school, to reduce the overall cost of the loan.
What is making interest payments on their loans?
Missing these can significantly lower your credit score, making it harder to get credit cards, loans, or even rent an apartment.
What are loan payments?
These financial resources enable you to pay for tuition and living expenses, allowing you to focus on your studies and complete your degree.
What are student loans?
This type of loan is offered by private lenders such as banks or credit unions to help cover college expenses.
What is a private loan?
For undergraduate Direct Subsidized and Unsubsidized Loans disbursed after July 1, 2023, this percentage represents the interest rate.
What is 4.483%?
Undergraduate students with financial needs who have not earned a bachelor's or professional degree are eligible for this type of federal aid.
Who are Pell Grant recipients?
Doing this can reduce the principal balance faster, which lowers the total interest paid over the life of the loan.
What is paying more than the minimum payment on loans?
This type of repayment plan sets your monthly loan payments based on your income and family size.
What is an income-driven repayment plan?
These are additional charges incurred when you fail to make your student loan payments on time.
What are late fees on student loans?
These are the key factors you should evaluate before deciding to take out a student loan.
What are the loan amount, interest rates, repayment terms, and future income?
Federal loans usually have these compared to private loans.
What are lower interest rates and more flexible repayment options?
This application process is required to apply for federal student loans.
What is completing the Free Application for Federal Student Aid (FAFSA)?
This is how the amount of the Pell Grant is determined, based on various factors like the student's Expected Family Contribution (EFC), cost of attendance, and enrollment status.
What is how is the Pell Grant amount determined?
This process combines multiple federal student loans into one loan with a single monthly payment.
What is loan consolidation?
This plan has fixed monthly payments over a period of 10 years.
What is the standard repayment plan?
This occurs when a portion of your paycheck is taken directly to repay your defaulted loan.
What is wage garnishment?
These are the two main types of federal student loans available to undergraduates.
What are Direct Subsidized Loans and Direct Unsubsidized Loans?
Federal loans often provide these options, which private loans do not.
What are income-driven repayment plans and loan forgiveness programs?
This varies based on your year in school and dependency status, ranging annually from $5,500 to $12,500 for undergraduates.
What is the maximum amount you can borrow in federal student loans?
You can receive this grant once per academic year, up to a maximum of 12 semesters or the equivalent.
What is how often can you receive the Pell Grant?
This involves taking out a new loan with a private lender to replace one or more existing loans, often at a lower interest rate.
What is loan refinancing?
You can achieve this by setting up automatic payments, consolidating loans, or refinancing with a private lender.
What is reducing your loan interest rates?
Unpaid loans can result in a lower credit score, which can limit your ability to get approved for future credit cards, mortgages, or other loans.
What are the effects of unpaid loans on future credit opportunities?
This is the average amount of student loan debt a graduate carries upon leaving college.
What is $30,000?
This type of federal loan is available to graduate students and parents of dependent undergraduate students to help cover education expenses.
What is a PLUS Loan?
This type of federal loan requires the borrower to pay the interest at all times, including while in school.
What is an unsubsidized loan?
When this happens, students can no longer receive Pell Grant funds and may need to explore other financial aid options like scholarships, loans, or work-study programs.
What happens when a student exhausts their Pell Grant eligibility?
These programs can eliminate the remaining loan balance after meeting specific requirements, reducing your overall debt burden.
What are the benefits of loan forgiveness programs?
This program forgives the remaining balance on Direct Loans after 120 qualifying monthly payments while working full-time for a qualifying employer.
What is the Public Service Loan Forgiveness program?
This occurs when the government takes your federal or state tax refund to pay off your defaulted student loan.
What are tax refund offsets?