study loans available

- [interviewer] we're heretoday with sean logan, director of college counselingat phillips academy. sean, one of the bigdecisions that students face is that of studentloans when they're going through the college admissions process. can you kind of explain to me where are the different places i can get loans and then how that impactswhat those options are? - [sean] sure, so the government is

probably the best sourceof loans right now. and, you know, there'salso smaller state loan programs that are out there,and that varies by states. - [interviewer] so that's sortof the federal government, then there's the state government. - [sean] yep. - [interviewer] okay. - [sean] there are colleges that will do their own institutional loans

and then there are privateinstitutions that will do loans. - [interviewer] okay, and of all these different options, where should i begin? - [sean] so, with yourfinancial aid package, colleges will help yousort of understand this, but in general, collegesare gonna use a lot of federal money atfirst and try to package you that way, and again,it's generally the best type of loan you can get.

there are need-basedloans that are out there so you have to have certainlevels of income to qualify. the first being thatthe federal perkins loan generally for more lower income students. that has a lot of reallypositive perks to it. they include things like a fixed rate. it has no origination fee. you have the flexibilitywith the government paying all of theinterest until six months

after you graduate, so that'sa great factor for that. - [interviewer] okay, so you're not gonna pay any interest while you're in school. - [sean] while you're in school, and you do have, again,some flexibile terms with deferring that ifyou go to graduate school. and again, you can take out in your first year up to 5,500 dollars, uh, you can take out up to 5,500dollars as an undergraduate

for the federal perkins loans. - [interviewer] okay,and that's up to 5,500? and is that per year or overall? - [sean] uh, a year. - [interviewer] okay, got it. are there any otherkind of need-based loans that are available fromthe federal government? - [sean] there are, so there's also subsidized stafford loans.

they're not quite as good terms as the perkins loans, butagain, still very good. probably the next bestloan you'll find out there. there is an origination fee to that. right now, the interest rate is actually a little bit lower than the perkins loan, but that will go updepending on the markets. again, it has the same maximum of 5,500 dollars per, for thisyear, for your first year.

- [interviewer] and is that5,500, does it stay 5,500 every year or does that change? - [sean] so that can goup as you're a sophomore, junior, or senior, that amount can go up. so you have a little bitmore flexibility with that. and the subsidized stafford, also, their interest rate is also paid for by the government until sixmonths after you graduate. - [interviewer] i see, so that's also

no interest paid while in school. - [sean] correct. - [interviewer] are there any loans that the federal government offersthat aren't need-based? - [sean] there are. now, one thing to remember is you still, you need to fill out afafsa form to qualify for any federal loans,so even if you, go ahead. - [interviewer] just so i understand,

so it's even if i don'thave financial need, my family makes a lot of money, i still fill out the fafsa just to get access to federal loans. - [sean] correct, and that's an important fact that people don't realize. so there is an unsubsidized stafford loan and again, it's not quite as good of terms as the other two we've talked about,

but it's still a very goodoption for many families. - [interviewer] okay,so i know that the rates for the stafford subsidizedand unsubsidized are the same so what are the actualdifferences between the two loans? - [sean] so the biggestdifference is is that the federal governmentwill not pay the interest while you're in school. - [interviewer] okay, sothey're not gonna cover you. - [sean] right.

- [interviewer] okay, and then,are there any other kinds, you mentioned there was one other kind of federal loan that's not need-based. - [sean] there also is somethingcalled a direct plus loans which a parent can takeout instead of the student. it's in the federal program, so it still has some of the benefits of that program but it's a higher rate, but again, it still has a lot of the other benefits

of the federal program and it's backed by the federal government. - [interviewer] great,okay, great, so that makes, those are for thefederal government loans. what about sort of stateor college sources. what are those loans all about? - [sean] so again, thatreally is gonna depend on the state and it's reallygonna depend on the college. so, those could be very good options.

personally, when i was in college i had some of my loans were college loans and those loans were actually,had no interest rate at all. so i was basically allowed to borrow, again, in that example we used before, i borrowed 5,000 dollars butthere was no interest at all. all i paid back over the life of the loan was the 5,000 dollars, so college loans can be a really good opportunity,

but again, not all colleges offer them and some of them don'thave as good of terms as say the federal government does. - [interviewer] okay,so that's really sort of state by state, college by college. there's not sort of ageneral rule of thumb, it's just worth looking into. - [sean] but it's worth looking into. the colleges will, ifyou qualify for them,

they'll give you those options. at the state level, it'salso worth looking into. the colleges willgenerally be able to sort of let you know if youqualify for these loans and you can decide how good they are for your family and your situation. - [interviewer] great,and then you mentioned federal, state, college, and you also mentioned private loans.

where do those kind offall into this equation? - [sean] so, i think interms of the best terms, the most flexibility,they're probably at the, you know, they would be my last option. now, they could be verygood options for a family that still need money, but i would say if you've exhausted those other options, this is, that's probablythe next place to go. you know, they aren't subsidized.

they are not need-based. and they definitely require,most of them will require a parent to commit to repay the loan if the student fails to. the interest rates will varyby the different institutions. so, banks, other financial institutions typically have the highest interest rates and the least flexible payment options. - [interviewer] so then,why wouldn't, as a student,

why wouldn't i justtake all stafford loans or stafford subsidized, or you know, if i didn't qualify,stafford unsubsidized. why would i even bother looking at something like a private loan. - [sean] well, unfortunately,with a stafford loan, right now, in the firstyear the most you can take out is 5,500 dollars and you may need a little bit more than that for loans.

so, you may need to look at other options and so that's why you would move down. with a perkins loan, you may not qualify because you don't meetthe income standards and for the subsidized stafford loan, you may not qualify for that. so, again, you may, you would definitely qualify for the unsubsidized loan, but then if you need a bit more

you may have to go tothese other alternatives. - [interviewer] i see,so if you kind of pass that yearly maximum on the stafford loans, you don't qualify income-wise for perkins, then it'll be down to either a plus loan, which has a fairly high interest rate, state or college loan,which kind of varies, or the private loans, andthose can have variable interest rates and maybenot as good repayment terms.

- [interviewer] but it soundslike first and foremost, if you can get accessto stafford or perkins, that's the place to start? - [sean] yes, absolutely. - [interviewer] great, thank you so much.