Federal Student Loans A Note to Parents
Federal student loans are government-backed, or The more you can help pay for college, the less debt
Private Student Loans
guaranteed. They are low-cost, fixed-rate loans that your child will have down the road. If you do not have A Guide to Responsible Borrowing
help students and/or parents cover a portion of the funds, consider borrowing on behalf of your child
their school expenses. Federal student loans have (e.g., with a Federal PLUS Loan) or cosigning on your
certain discharge and loan forgiveness options not child’s private student loan. Generally, a cosigned loan
has lower rates and fees.
generally available under private student ReseaRch
File a Free Application for
Federal Stafford Loans are made to Federal Student Aid (FAFSA)
students (rather than parents) and have
annual loan maximums based on the You and your child should file the FAFSA every year,
student’s year in school. Subsidized Stafford even if you do not think you will qualify for federal aid.
Loan interest is paid by the government for
low-income students during in-school and
authorized deferment periods.
Type your message here. RemembeR
Federal PLUS Loans are made to parents of
dependent, undergraduate students and can
cover all costs remaining after other forms of
student aid are applied.
Federal Graduate and Professional
PLUS Loans are made to graduate and
professional students and can cover all costs
remaining after other forms of student aid Repay
A Word to the Wise
Take advantage of all federal
student loans before borrowing a
Place your logo here.
RESEARch REmEmbER REPAy
Explore your Options Understand your Obligation Uphold your Promise
Private student loans are consumer loans made to You must repay your student loans – even if you do not Repaying your student loans is a serious legal
individuals to help pay for college. They are provided by graduate or get a job in your chosen field. Failure to obligation, so you need to set aside enough money
for-profit and nonprofit lending organizations and are make scheduled payments could lead to default, which to make your student loan payment on time and
not backed by the federal government. Private student would damage your credit rating and lead to other in full each month. Your lender will depend on you
loans are designed to supplement, not replace, other serious consequences. to uphold your promise to repay so that they can
financial aid sources to fill funding gaps. Only borrow make loans to other deserving students. By paying
what is needed to cover your education expenses. Before you borrow a private student loan, think about your student loan on time, you will be acting as a
whether you will be able to repay it. This loan will reduce responsible borrower. You will also be successfully
Work with the financial aid office at your school to look what you can spend in the future on a car, home, furniture managing your finances and establishing good credit.
into sources of federal, state and/or school aid prior to and other living expenses. Here are some things you can
getting a private student loan. If you have already done do while you are in college to help save money: Some loans offer a grace period when you graduate,
this and are still unable to cover your expenses, a private leave school or drop below half-time status. During
student loan may be a good option. Generally, they are Identify needs versus wants and make your the grace period, you are not required to make
less expensive than unsecured consumer credit (such purchases accordingly. monthly payments. In most instances this will
as credit cards). If you require a private student loan, do Make a realistic budget and stick to it. increase the amount that you will pay on your loans
not wait until your tuition bill is due to apply for one, Take advantage of work-study opportunities or as interest charges are increasing on your loan(s),
because you may receive less favorable terms get a part-time job. so check with your lender. At the end of your grace
and conditions. period, you must begin making monthly payments.
Most programs allow borrowers to delay payments Contact your lender if you are unable to make
during school and offer hardship deferments during your monthly payments. You may qualify for other
repayment. These options often increase the total repayment options, or be able to postpone or reduce
amount you will pay, because interest charges will accrue your payments by applying for a deferment or
during deferment periods. Some private student loans forbearance. These should be used only in times of
require a cosigner (a person who promises to become can you Afford a Private extreme need and will increase the amount that is
legally responsible to pay your debt if you fail to do so). Student Loan? eventually repaid on your loan.
If you are considering a variable rate loan, understand
that rate changes may not be in your favor and could
result in an increased monthly payment. Ask yourself whether a job in your
chosen field will allow you to make
Read all material provided to you by your lender, and your monthly payments on your
Pay your Interest
ask about things you do not understand. Most private student loans.
student loans are made by responsible lenders – and all Consider making monthly interest
are regulated by consumer credit laws. Get to know your payments while in school. If you do not,
Use a student loan repayment
lender prior to borrowing, because your relationship the interest will accrue and be added to
calculator, such as the one at
with them will be a long-term one. Visit the Better the amount you borrowed, costing you
Business Bureau at www.bbb.org, ask your financial aid more in the long run. A few dollars paid
help you estimate the total amount
officer and talk to others who have worked with the each month on your private student loan
of interest you will pay, what your
lender so you can make an informed decision. will save you money over time.
monthly student loan payments will
be, and how long it will take to repay