1. Going Private The Ins and Outs of Alternative Loans

2. 2 What you will learn  How private loans differ from federal loans  How to maximize your financial aid sources  What to ask when shopping for a private loan

3. How Private Loans Differ from Federal Loans

4. 4 Credit qualifications  Private loans –most lenders will require a credit check  Federal Stafford loan –not required  Federal PLUS loan –credit check required –all approved borrowers receive same interest rate, regardless of credit rating

5. 5 Interest rates  Private loans –interest rates vary based on market conditions, borrower’s credit, lender  Federal Stafford loan –fixed at 6.8%  Federal PLUS loan –fixed at 8.5% (FFEL) or 7.9% (Direct)

6. 6 Repayment options  Private loans –vary by lender –may not have a grace period  Federal Stafford loan –several choices (standard, extended, graduated, and income-sensitive) –grace period Stafford: six months PLUS: no grace period

7. 7 Hardship assistance  Private loans –differ by lender  Federal Stafford and PLUS loans –deferment –forbearance

8. 8 Fees  Private loans –vary by lender  Federal Stafford and PLUS loans –origination fee: Stafford - 2% PLUS - 3% –1% default fee –fees are not always passed on to the borrower; varies by lender/guarantor

9. Maximizing Your Financial Aid Sources

10. 10 Grants  Sources: –federal government –state governments  Eligibility criteria: –financial need –mostly for undergraduates

11. 11 Grants  Funds available: –generally as academic terms begin  Repayment: –not unless you drop out

12. 12 Scholarships  Sources: –private donors –your college  Eligibility criteria: –academic or athletic excellence –community involvement –course of study or career choice –employment or membership –financial need

13. 13 Scholarships  Funds available: –generally as academic terms begin  Repayment: –generally not unless you drop out –may have to repay if you don’t fulfill certain conditions

14. 14 Scholarships  Fastweb –www.fastweb.com  College Board’s FUND FINDER –http://apps.collegeboard.com/cbsearch_ss/we lcome.jsp  SRN Express –www.srnexpress.com  Scholarships.com –www.scholarships.com

15. 15 Scholarships  Peterson’s scholarship search –www.petersons.com/finaid  NextStudent –www.nextstudent.com/scholarship_search/sc holarship_search.asp  Broke Scholar –www.brokescholar.com

16. 16 Work-study  Sources: –federal government and your college  Eligibility criteria: –financial need  Funds available: –earn by working part-time while in college –paid weekly to monthly no up-front money for tuition and fees

17. 17 Work-study  Repayment: –no  Other advantages: –on-campus job –usually 10-15 hours per week –work experience in your field

18. 18 Best to worst types  Grants and scholarships  Work-study  Loans –federal –private educational loans

19. 19 Additional sources of income  Part-time job –do not work too much  Education tax credits and deductions

20. What to Ask When Shopping for a Loan

21. 21 Who to go to for private loans  Your school’s financial aid office  Banks or other lenders Private loans may affect your eligibility for other forms of financial aid—be sure to check with your financial aid office first!

22. 22 What to ask  What is the interest rate on the loan and how is the rate calculated?  At what point, and under what circumstances, might the rate change?  Will I need a co-signer to qualify for a loan or to receive a lower interest rate?  What fees are associated with the loan?

23. 23 What to ask  When do I begin making payments and what are my repayment options?  Can I defer or reduce loan payments during tough times?  How will this loan affect my eligibility for other forms of financial aid?

24. 24 What you have learned  How private loans differ from federal loans  How to maximize your financial aid sources  What to ask when shopping for a private loan

25. 25 Now what?

26. 26 More information Sharon Cabeen Vice President of Financial Literacy sharonc@nslp.org Brenda Vaughn Director of Financial Literacy brendav@nslp.org

27. 27 More information Mel Stephens Money Management Consultant mels@nslp.org Nic Ourso, CPA, CFP Money Management Consultant nicourso@bellsouth.net Pauline Balta Financial Literacy Coordinator paulineb@nslp.org