Outcomes
Thinking about taking out a loan or interested in learning more about a loan you already have? You’re in the right place! In this module you will learn more about:
Thinking about taking out a loan or interested in learning more about a loan you already have? You’re in the right place! In this module you will learn more about:
If you already have a loan, there are a few things you should be sure you know! By logging into studentaid.gov, you will be able to find information on all your existing federal student loans. This is also a great website to learn more about federal loans in general! As a borrower, you should be able to answer a few questions:
Loan Servicer: A company that handles the billing and other services on your federal student loan
Department of Education (ED): the lender for most federal student loans
Lender: the organization that made the original loan (example: ED, Wells Fargo)
Loan: money you borrow and must pay back with interest
Direct Loan: federal student loan borrowed directly from the U.S. Department of Education to attend a participating school
Private Loan: student loan borrowed from a school, bank, credit union, or other lending institution
Interest: an expense charged on borrowed money that is calculated as a percent of the remaining unpaid loan
Loan Principal: the amount of money that was borrowed and needs to be repaid to the lender (excludes interest)
Total Cost of Attendance: includes tuition, fees, room, board, books, transportation, and personal expenses
Capitalization: when unpaid interest is added to the principal balance of your loan and then you are charged interest on the new, larger amount
Student Dependency Status: determines whether or not a student needs to include their parent’s information when filling out the FAFSA or WASFA
To learn the specifics of your student loans, you will need to sign in to studentaid.gov with your FSA ID – the same username and password you used to complete the FAFSA. Here you can learn more about applying for financial aid and different types of financial aid. They also break out information depending on if you are thinking about going to college, are currently in college, are a parent, or are in the repayment phase.
You can also learn more about your loans by visiting the website of your student loan servicers. If you don’t know who your servicer is, start with studentaid.gov.
To find information on your private student loans, visit the website or contact your lender. If you don’t know who owns your student loans, or if they are in collections and you don’t know who to contact, you can view your credit report to find out. To view each of your three credit reports, visit www.annualcreditreport.com. You can view each credit report for free each year.
If you have existing loans or are thinking about taking out new loans, you should know the answer to the following questions:
When it comes to taking a student loan, federal loans should always be the first place you look! Why? Because federal loans generally have lower interest rates, greater protections for borrowers, and more flexibility for repayment and forgiveness. Check your award letter to see what your federal options are:
If you need to borrow more money than is federally available to you, then you may have to consider private loans. Private loans can generally be found through a school, bank, credit union, or other lending institution. When considering a private loan, it is important to explore your options, avoid scams and deceptive practices, and to fully understand the terms of your loan (interest rate, default, fees, penalties, and benefits).
For many students, affording college while only using savings, scholarships, and grants is not possible so a loan is needed. A loan is money you borrow from a lender that has to be paid back with interest over a period of time.
To be eligible for Federal loans, it is important to fill out one of the following applications:
Incorrect: You will need to fill out the FAFSA (or WASFA) by the deadline before each year of school
Incorrect: for federal loans your lender is generally the Department of Education and your servicer is a different company (this may be true of private loans as well)
A is incorrect: Unlike scholarships and grants, loans have to be repaid with interest
B is incorrect: if you are offered a loan for $1,000 you could choose to only accept $700
C is CORRECT: loans should be one of the last options you consider when thinking about paying for college. If you do take out loans, you should try to take as little loan money as possible.
D is incorrect: only accept as much loan money as you need to meet your college costs
Incorrect: federal loans generally have lower interest rates, more flexibility for repayment and forgiveness, and more protections for borrowers than private loans
Incorrect: federal loans are made by the Department of Education, their website can give you more information about federal loans you have
Nicely done! It looks like you really understand this module!
If you are still a little confused, you may want to review the module.
