WARM-UP What is debt? Explain 5 ways you can be in debt.

Tuesday, November 17, 2015 Objective: Students will be able to identify the types of loans available to consumers and explain the responsibilities and obligations of borrowing money. Purpose: If you need additional money to make a purchase or investment, it helps to know how to get that money.

What lenders look for Stable employment Stable residence Responsible handling of other debts The more money that a banks lends out, and the higher the interest rate, the more profit a bank can make.

Information to know when borrowing money amount borrowed interest rate term (length of the loan) payment schedule (how often are payments due) total payments

Types of Loans Secured loans a loan that is obtained by offering an asset as collateral to ensure repayment of the loan you lose the asset if you are unable to make the payments examples: Car loan, mortgage/home loan Unsecured loans a loan that is obtained without the use of collateral fines or lawsuits are filed if you are unable to make the payments examples: payday loans, student loans, credit cards

Other Loans Payday Loans short-term loans borrowed using your next paycheck have high APRs and can be difficult to pay off Consolidated Loans a loan made in order to consolidate several debts into one loan usually taken out for the purpose of reducing the monthly payments by extending them over a longer time period

Types of Financial Aid Grants and scholarships Work-Study programs Awarded to students who demonstrate financial need. Provides part time employment at no lower than the federal minimum wage. Loans

Common Criteria for Financial Aid Income: your income and your parents’ income The number of college students in your family Family assets and expenses The amount of aid money available at the school you plan to attend The number of students applying for aid in a given year and their financial need compared to yours

Free Application for Federal Student Aid (FAFSA) Determines a student’s eligibility for financial aid Nearly every student is eligible for some kind of financial aid Types of Aid Available Pell Grant: up to $5,645 per year for students with a low expected family contribution Federal Direct Loans: interest is paid for by the government while the student is enrolled as an undergraduate Perkins Loan: fixed interest loan for students from low-income families

Nontraditional Ways of Paying for College Do your first 2 years at a community/junior college, then transfer to a 4 year university for the remaining 2 years Become a Resident Assistant (RA) at your university Pursue an accelerated degree program or take AP/dual- enrollment classes while in high school Join the military through JROTC, ROTC, or regular enlistment

Tips for Financing College Use savings to pay off any debts you have before applying for aid Research all scholarships you may be considered for. Pay close attention to who is eligible for a scholarship or loan Unless you are offered a generous scholarship or have the means to pay the higher tuition, avoid attending private and out-of-state colleges. Make a smart choice for your area of concentration