Husker Hub Explains: Federal Loan Types

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11/29/2021 Added

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In this video, Husker Hub explains the differences between federal subsidized, unsubsidized, and PLUS loan options. Frequently asked questions regarding these loan offerings are explored.

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[00:00:03.480]Hi, welcome to a new Husker Hub Explains video.
[00:00:05.700]In this video,
[00:00:06.533]I'll be going over the different types
[00:00:08.760]of federal loans that someone could be eligible for,
[00:00:11.640]whether you're a student
[00:00:12.540]or potentially a parent of a dependent student,
[00:00:16.380]as well as eligibility requirements
[00:00:18.450]and important information you should know
[00:00:20.820]when it comes to federal student loans,
[00:00:23.370]whether you're a first-time borrower,
[00:00:24.750]or if you've borrowed loans in the past.
[00:00:27.150]Let's get started.
[00:00:28.740]In this video, we'll be going over the different types
[00:00:31.170]of federal loans that are available,
[00:00:33.240]as well as important information
[00:00:35.400]to have when it comes to these loans.
[00:00:37.500]We'll first go over the different types
[00:00:39.390]of federal student loan options.
[00:00:41.790]First, for undergraduate students,
[00:00:43.530]there is the Federal Direct Subsidized Loan
[00:00:46.866]or the Federal Direct unsubsidized Loan.
[00:00:48.720]The Federal Direct Subsidized Loan is a need-based loan,
[00:00:51.570]so that can look different for many students.
[00:00:53.970]The Federal Direct Unsubsidized Loan
[00:00:55.950]is not a need-based loan,
[00:00:57.870]and the difference between both loans is
[00:01:00.030]that the subsidized loan is not accruing interest
[00:01:03.480]while a student is enrolled in school.
[00:01:05.520]While the unsubsidized loan does accrue interest
[00:01:08.460]as the loan is being used.
[00:01:10.590]Both of these loans,
[00:01:11.910]they do not require repayment while a student is enrolled,
[00:01:15.480]at least halftime in school,
[00:01:18.150]and they have a six-month grace period
[00:01:20.280]after they graduate or drop below halftime
[00:01:23.280]before repayment is required.
[00:01:27.330]For graduate students,
[00:01:28.770]they have two different types of loans.
[00:01:30.900]The Federal Direct Unsubsidized Loan
[00:01:33.450]or the Federal Direct Graduate PLUS Loan.
[00:01:36.210]The unsubsidized loan does accrue interest
[00:01:38.580]as it's being used.
[00:01:40.830]It also is in deferment or where repayment is not required,
[00:01:44.700]again, as long as a student is enrolled at least halftime.
[00:01:48.030]For the Federal Direct Graduate PLUS Loan,
[00:01:50.430]this does have a credit check required,
[00:01:52.320]but no application is required.
[00:01:54.450]When students accept this loan on MyRED,
[00:01:57.330]a credit check is sent in for them on their behalf.
[00:02:00.420]This loan also accrues interest while it is in use
[00:02:03.720]and can also be deferred for repayment
[00:02:05.580]while a student is enrolled, at least halftime.
[00:02:10.320]Now, there's a Federal Parent loan option.
[00:02:13.080]This is the Parent PLUS loan.
[00:02:14.970]This is only available to parents
[00:02:16.530]of enrolled undergraduate students,
[00:02:18.810]and there is an application
[00:02:20.460]from the parent that is required.
[00:02:22.950]This application can be found on the Student Aid website
[00:02:27.480]and there will be a credit check required
[00:02:30.030]with the application.
[00:02:31.620]Parents are notified immediately upon completing
[00:02:34.620]the application whether approved or denied,
[00:02:38.670]and this is where parents can find the application.
[00:02:41.790]They will need to log in with their own FSA ID
[00:02:45.120]that was created for the FAFSA.
[00:02:49.350]Additionally, if a parent is borrowing this loan
[00:02:51.870]for the first time, they will have
[00:02:54.630]to complete a master promissory note for this loan.
[00:02:58.560]They can request deferment
[00:03:00.150]of repayment while the student is in school
[00:03:02.820]for up to six months after.
[00:03:04.560]This does have to be requested in the application.
[00:03:08.790]Again, this is a loan under the parent name
[00:03:11.040]and the parent is solely responsible for this loan.
[00:03:15.780]Moving forward, these are the eligibility requirements
[00:03:18.630]for those loans as well as for deferment of the loans.
[00:03:23.970]So here you can see the amount of credits a student needs
[00:03:27.060]to be enrolled in to be considered halftime,
[00:03:29.520]both for undergraduate students
[00:03:31.590]as well as graduate students.
[00:03:34.560]Students must also be making satisfactory academic progress.
[00:03:39.870]If you are unfamiliar
[00:03:41.190]with satisfactory academic progress or SAP,
[00:03:45.060]then there is a Husker Hub Explains video
[00:03:47.280]that goes into depth about this topic.
[00:03:50.100]We recommend watching it in order to be more aware
[00:03:54.090]of what SAP is and how to maintain the eligibility
[00:03:57.750]for federal aid through SAP.
[00:04:00.990]And lastly, there is loan counseling required
[00:04:03.900]if it is your first time borrowing a student loan.
[00:04:07.290]If you're an undergraduate student,
[00:04:08.730]you'd have to complete the entrance counseling
[00:04:10.650]and master promissory note if this is your first time
[00:04:13.410]ever borrowing federal student loans.
[00:04:16.290]For graduate students, if you are required
[00:04:18.480]to complete any of these items,
[00:04:20.460]a checklist item will appear on your MyRED.
[00:04:23.430]And again, for parents,
[00:04:24.750]if you do the Parent PLUS Loan and are approved,
[00:04:27.630]then you would be required to do the master promissory note.
[00:04:30.750]All of these can be found on studentaid.gov.
[00:04:33.690]And for undergraduate students,
[00:04:35.010]if you're needing assistance
[00:04:36.540]with the entrance counseling or master promissory note,
[00:04:39.240]there's also a Husker Hub Explains video
[00:04:41.640]that goes over these topics.
[00:04:44.340]In this section, I want to discuss a little bit
[00:04:46.830]about responsible borrowing,
[00:04:48.720]such as knowing the maximum amount
[00:04:50.880]in loans that you are able to borrow
[00:04:53.970]depending on your academic grade level,
[00:04:56.970]as well as just some things to consider
[00:04:59.040]when it comes to borrowing loans.
[00:05:01.200]So first, you can see the maximum amount of loans
[00:05:05.580]that can be borrowed by going
[00:05:06.930]to the Federal Student Aid website.
[00:05:10.740]On the studentaid.gov website,
[00:05:12.600]if you hover over this menu here
[00:05:15.090]and select undergraduate and graduate loans,
[00:05:18.600]you'll be taken to this page.
[00:05:22.080]On this page, if you scroll down,
[00:05:25.680]and look in the section "How much can I borrow?"
[00:05:29.010]you can see here it's broken down by grade level
[00:05:31.950]as well as whether a student is dependent
[00:05:35.610]or independent as determined by FAFSA.
[00:05:38.760]So when looking at the loan limits that you can have
[00:05:42.240]as a either first year, second year, third year and beyond,
[00:05:46.560]or graduate student, please be sure
[00:05:49.350]that you are looking at the right section,
[00:05:51.030]whether you're dependent or independent.
[00:05:56.070]We also talk about other things to consider
[00:05:58.350]for the loans such as interest rate.
[00:06:01.920]So interest rate and knowing what the interest rate
[00:06:04.320]is for your loan can determine
[00:06:06.390]how much it is that you're going to want to borrow
[00:06:09.630]if you're not necessarily needing the maximum amount.
[00:06:12.960]So this page goes over not only how interest adds up
[00:06:16.650]and what happens with unpaid interest.
[00:06:20.160]Here you can see the different fixed interest rate amounts
[00:06:23.250]for undergraduate, graduate, and parent.
[00:06:26.190]Again, these are fixed interest rate
[00:06:27.840]for the life of the loan and can change from year to year.
[00:06:32.100]You can also view what interest is
[00:06:34.260]and how interest is calculated by scrolling down further.
[00:06:37.530]There is a lot of important information on this page.
[00:06:41.010]Something else to consider is
[00:06:42.510]that these loans do have an origination fee or a loan fee.
[00:06:46.230]So if students are planning
[00:06:47.880]on borrowing just an exact amount needed
[00:06:50.370]for the remainder of their balance
[00:06:52.860]or whatever it is they might need the loan for,
[00:06:55.590]we also think it's important
[00:06:57.210]that students take into account the loan fee,
[00:06:59.820]so the amount that is accepted to borrow
[00:07:02.220]will not be the amount that is dispersed.
[00:07:04.590]It's typically a little bit lower.
[00:07:06.570]So you can see here what the origination fee is
[00:07:09.150]for Direct Subsidized and Direct Unsubsidized Loans,
[00:07:12.360]as well as for the Direct PLUS Loans.
[00:07:15.420]And now for information on repayment.
[00:07:18.180]Your loan servicer will be assigned to you
[00:07:20.430]after you have borrowed a loan and it has been dispersed.
[00:07:24.540]And you can always find your loan servicer
[00:07:27.531]on the Federal Student Aid website
[00:07:29.640]by logging in with your FSA ID
[00:07:32.070]and going to your dashboard.
[00:07:34.140]So once you're logged in,
[00:07:35.220]your dashboard will be located here on the right hand side.
[00:07:38.880]You should also receive communication about
[00:07:41.280]who your loan servicer is via mail and email.
[00:07:45.030]It's important to keep your contact information
[00:07:47.700]up to date on the Federal Student Aid website.
[00:07:50.310]That is where the loan lenders
[00:07:51.660]will receive your contact information.
[00:07:55.560]Now, other resources that may be beneficial
[00:07:57.840]to students when it comes to loans
[00:08:00.540]or management of money is CashCourse
[00:08:03.510]through the Big Red Resilience.
[00:08:06.600]So financial wellbeing is an important topic.
[00:08:09.870]So if you go to CashCourse provided
[00:08:12.362]by Big Red Resilience and Wellbeing,
[00:08:13.860]you're able to get information
[00:08:16.020]on how to budget, use a financial calculator,
[00:08:20.460]determine how long it may take you to pay back your loans,
[00:08:24.060]things of that nature.
[00:08:25.710]So you can access CashCourse by going to resilience.unl.edu.
[00:08:31.650]There is also a loan simulator
[00:08:33.690]located on the Federal Student Aid website.
[00:08:36.960]This website can help find strategies for loan repayment
[00:08:40.860]as well as if in the future you may be struggling
[00:08:43.470]with student loans,
[00:08:45.390]as well as if you maybe want to borrow more,
[00:08:48.240]they can simulate what it would look like
[00:08:49.980]if you do borrow more money.
[00:08:52.680]That's all for this video.
[00:08:53.910]But if you're wanting to check out
[00:08:55.200]other Husker Hub Explains video resources,
[00:08:57.870]you can go to huskerhub.unl.edu.
[00:09:01.080]Hover over the Resources tab
[00:09:02.880]and the first option will take you to our menu
[00:09:06.450]with different topics that we've gone over.
[00:09:09.180]We are always open to new ideas or suggestions
[00:09:11.850]for other videos that we could create
[00:09:13.500]that may be beneficial to students.
[00:09:15.690]You can contact us via any of these methods
[00:09:18.300]or if you have any questions
[00:09:19.680]and would like to reach out to us, you can do so here.
[00:09:22.650]Thank you.

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Tags:
student loans
loan
FAFSA
subsidized
unsubsidized
Graduate PLUS
Parent PLUS

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Husker Hub Explains: Federal Loan Types

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