2.4
STUDENT LOANS: FRIEND OR FOE?

DISCUSSION PROMPT:
What does it mean to 'take out a student loan'?
Discuss these questions with your classmates or with a partner:

1. In your own words, explain what it means to take out a loan. 

2. Would you be comfortable having $5,000 of student loan debt after college? What about $25,000 of debt? What about $100,000?

3. What are some foreseeable issues/dilemmas with taking out multiple loans or taking out a substantial loan?

ARTICLE:
2023 Student Loan Debt Statistics
You probably know that student loan debt has been on the rise for a number of years. Skim the first half of the article, stopping at “Federal Student Loans by Age”. Then, answer the questions.

1. How much has the annual cost of tuition increased over the last 30 years at public four-year colleges? At private four-year colleges?

2. Approximately what percentage of students at 4-year colleges took out student loans?

3. How much does the average borrower have in student loan debt?

4. Use the chart to answer: what specific type of federal student loan is most common among borrowers?

VIDEO:
After the FAFSA: What Happens Next?

If you decide to take out Federal Student Loans, there are some additional things you will need to do before the money is disbursed. Watch this video starting at 1:57 & stop at 3:01 to learn more about this process and how the financial aid you accept is offered to you. Then, answer the questions in the Google Form.
** Remember: only watch the video from 1:57-3:01.

1. What are two things you will need to do if you accept a Federal Student Loan? 

2. True or False: The financial aid money you accept from your offer first goes directly to you. 

3. Why do you think you have to file the FAFSA every year?

VIDEO:
The Different Types of Federal Student Loans

As you know, federal loans should be your first option if you are looking to borrow money for college. There are three main types of federal student loans. Watch this video & then answer the questions in the Google Form. Answer options for MCQ are found in the Google Form.

1. What is the benefit of having a fixed-interest rate loan? 

2. Select TWO statements that correctly describe a Direct Subsidized Loan and a Direct Unsubsidized Loan

3. Who qualifies for a Direct Plus Loan? (hint: choose two correct answers)

TWO ARTICLES:
#1: Federal Loan Limits, Interest Rates, & Fees
#2: What are the Interest Rates for Federal Student Loans?

Many students may not know that there is a limit to how much you can borrow from the government per loan and that there are often fees for different loans. Skim through the sections labeled “How much can I borrow?” & “How will I receive my loan?” for the first article. 

Then, skim through the sections “What are the interest rates for federal student loans?” & “Are there any fees for federal student loans?” in the second article. Finally,  answer the questions.

1. Did anything about the loan limits surprise you? Why or why not?

2. Why do you think the amount you can borrow as a freshman is less than the amount you can borrow as a sophomore, and then as a junior and beyond?

3. What is the current interest rate on Direct Subsidized and Direct Unsubsidized Loans? 

4. Suppose you need to borrow more than $5,500 during your Freshman year of college. Where do you think you can obtain that loan?  

5. True or False: Student loans are disbursed immediately to you, and you use the funds to pay things like tuition, fees, room, and board, etc
   
   

** Student Tip:
The authority for schools to make new Perkins Loans ended on September 30, 2017. The second article mentions Perkins Loans for people who received the loan before this date & may still be managing repayment. You can learn more here.

VIDEO:
Responsible Borrowing

Watch the video & then answer the following questions in the Google Form.
1. List three key actions you can take to be a “responsible borrower”.
2. Define the following two terms:
a. Promissory Note
b. Loan Servicer

TWO ARTICLES:
#1: Comparing Federal & Private Student Loans
#2: 5 Best Private Student Loan Options in 2018

What if scholarships, grants, work-study, federal loans, & school & state loans are not enough to cover your total cost of attendance? You can look into private loans. But remember, this should be your LAST option because you will likely have higher interest rates! Read through both of these articles to compare federal & private student loans and to learn about some private student loan options. Then, answer the questions. 

1. Identify 3-5 differences between federal and private loans that stood out to you and explain why they caught your attention.

2. Think back to the interest rates you wrote down for federal loans in Resource #6. How did those interest rates compare to those you saw for private loans in the 2nd article you read? Were the private loan interest rates surprising to you? Why or why not?

VIDEO:
A Guide to Proper Use of Private College Loans

If you do decide to take out a private loan to help pay for college, there are some important things you should look out for and know. Watch this video & answer the questions in the Google Form.

1. What determines the interest rate on many private student loans? 

2. Who offers private student loans?

3. In resource #6, you found out that there is a limit to the amount you can borrow each year through a federal loan. How do limits on private loans differ?

ARTICLE:
How To Reduce Student Loan Debt While You’re in School

While student loan repayment on most loans often starts after graduation, there are a few things you can do while you’re still in college to reduce the total amount you are borrowing. Starting from #6, read through the suggestions in this list. Then, write the tips you find especially helpful in the  Google form. 

PROJECT:
College & Career Choices 

This activity uses two online tools that can help with college & career planning.

• Tuition Tracker allows you to enter your approximate family income & find the net cost of attending specific colleges and universities based on that income. You can also see the acceptance rate, the racial makeup of the student body, & 6-year graduation rates.
  **Student Tip: On some occasions, you will get a connection warning pop-up for this site. In this case, you can technically still access the site by going to "Advanced--> proceed to the website anyway”

• My Next Move provides salary information and job growth outlook for a huge range of careers. It also tells you the skills, abilities, knowledge, & personality characteristics needed to excel in the given career.
  
  

Complete the project by following all the directions in the Google Form. If you need more guidance, you can use the presentation below.