1 00:00:00,095 --> 00:00:01,413 - [Interviewer] We're here today with Sean Logan, 2 00:00:01,413 --> 00:00:04,046 director of college counseling at Phillips Academy. 3 00:00:04,046 --> 00:00:07,378 Sean, one of the big decisions that students face 4 00:00:07,378 --> 00:00:09,715 is that of student loans when they're going 5 00:00:09,715 --> 00:00:11,796 through the college admissions process. 6 00:00:11,796 --> 00:00:13,684 Can you kind of explain to me where are 7 00:00:13,684 --> 00:00:15,103 the different places I can get loans 8 00:00:15,103 --> 00:00:17,739 and then how that impacts what those options are? 9 00:00:17,739 --> 00:00:19,363 - [Sean] Sure, so the government is 10 00:00:19,363 --> 00:00:22,207 probably the best source of loans right now. 11 00:00:22,207 --> 00:00:26,617 And, you know, there's also smaller state loan 12 00:00:26,617 --> 00:00:29,952 programs that are out there, and that varies by states. 13 00:00:29,952 --> 00:00:31,019 - [Interviewer] So that's sort of the federal government, 14 00:00:31,019 --> 00:00:32,320 then there's the state government. 15 00:00:32,320 --> 00:00:32,970 - [Sean] Yep. 16 00:00:32,970 --> 00:00:33,366 - [Interviewer] Okay. 17 00:00:33,366 --> 00:00:34,493 - [Sean] There are colleges that will 18 00:00:34,493 --> 00:00:36,803 do their own institutional loans 19 00:00:36,803 --> 00:00:39,903 and then there are private institutions that will do loans. 20 00:00:39,903 --> 00:00:42,320 - [Interviewer] Okay, and of all these 21 00:00:42,320 --> 00:00:45,198 different options, where should I begin? 22 00:00:45,198 --> 00:00:47,718 - [Sean] So, with your financial aid package, 23 00:00:47,718 --> 00:00:49,679 colleges will help you sort of understand this, 24 00:00:49,679 --> 00:00:52,181 but in general, colleges are gonna use a lot 25 00:00:52,181 --> 00:00:54,115 of federal money at first and try to package 26 00:00:54,115 --> 00:00:56,055 you that way, and again, it's generally the best 27 00:00:56,055 --> 00:00:57,980 type of loan you can get. 28 00:00:57,980 --> 00:01:00,222 There are need-based loans that are out there 29 00:01:00,222 --> 00:01:03,253 so you have to have certain levels of income to qualify. 30 00:01:03,253 --> 00:01:06,352 The first being that the Federal Perkins loan 31 00:01:06,352 --> 00:01:09,119 generally for more lower income students. 32 00:01:09,119 --> 00:01:12,242 That has a lot of really positive perks to it. 33 00:01:12,971 --> 00:01:16,002 They include things like a fixed rate. 34 00:01:16,002 --> 00:01:18,430 It has no origination fee. 35 00:01:19,114 --> 00:01:21,705 You have the flexibility with the government 36 00:01:21,705 --> 00:01:24,086 paying all of the interest until six months 37 00:01:24,086 --> 00:01:27,382 after you graduate, so that's a great factor for that. 38 00:01:27,382 --> 00:01:27,975 - [Interviewer] Okay, so you're not gonna 39 00:01:27,975 --> 00:01:29,438 pay any interest while you're in school. 40 00:01:29,438 --> 00:01:31,133 - [Sean] While you're in school, 41 00:01:31,133 --> 00:01:32,758 and you do have, again, some flexibile terms 42 00:01:32,758 --> 00:01:36,066 with deferring that if you go to graduate school. 43 00:01:36,066 --> 00:01:37,786 And again, you can take out in your 44 00:01:37,786 --> 00:01:39,677 first year up to 5,500 dollars, uh, 45 00:01:39,677 --> 00:01:42,058 you can take out up to 5,500 dollars as an undergraduate 46 00:01:42,058 --> 00:01:43,279 for the Federal Perkins loans. 47 00:01:43,279 --> 00:01:46,170 - [Interviewer] Okay, and that's up to 5,500? 48 00:01:46,170 --> 00:01:48,191 And is that per year or overall? 49 00:01:48,191 --> 00:01:49,792 - [Sean] Uh, a year. 50 00:01:49,792 --> 00:01:50,988 - [Interviewer] Okay, got it. 51 00:01:50,988 --> 00:01:52,839 Are there any other kind of need-based loans 52 00:01:52,839 --> 00:01:54,487 that are available from the federal government? 53 00:01:54,487 --> 00:01:55,091 - [Sean] There are, so there's 54 00:01:55,091 --> 00:01:57,539 also subsidized Stafford loans. 55 00:01:57,539 --> 00:01:59,167 They're not quite as good terms 56 00:01:59,167 --> 00:02:02,012 as the Perkins loans, but again, still very good. 57 00:02:02,012 --> 00:02:04,879 Probably the next best loan you'll find out there. 58 00:02:04,879 --> 00:02:08,315 There is an origination fee to that. 59 00:02:08,315 --> 00:02:10,362 Right now, the interest rate is actually 60 00:02:10,362 --> 00:02:13,267 a little bit lower than the Perkins loan, 61 00:02:13,267 --> 00:02:16,309 but that will go up depending on the markets. 62 00:02:16,309 --> 00:02:17,469 Again, it has the same maximum 63 00:02:17,469 --> 00:02:21,906 of 5,500 dollars per, for this year, for your first year. 64 00:02:21,906 --> 00:02:23,624 - [Interviewer] And is that 5,500, does it stay 5,500 65 00:02:23,624 --> 00:02:25,216 every year or does that change? 66 00:02:25,216 --> 00:02:28,024 - [Sean] So that can go up as you're a sophomore, 67 00:02:28,024 --> 00:02:30,278 junior, or senior, that amount can go up. 68 00:02:30,278 --> 00:02:32,901 So you have a little bit more flexibility with that. 69 00:02:33,285 --> 00:02:35,831 And the subsidized Stafford, also, 70 00:02:35,831 --> 00:02:37,049 their interest rate is also paid for 71 00:02:37,049 --> 00:02:39,791 by the government until six months after you graduate. 72 00:02:39,791 --> 00:02:40,487 - [Interviewer] I see, so that's also 73 00:02:40,487 --> 00:02:42,145 no interest paid while in school. 74 00:02:42,145 --> 00:02:43,806 - [Sean] Correct. 75 00:02:43,806 --> 00:02:45,642 - [Interviewer] Are there any loans that 76 00:02:45,642 --> 00:02:48,380 the federal government offers that aren't need-based? 77 00:02:48,380 --> 00:02:48,984 - [Sean] There are. 78 00:02:48,984 --> 00:02:51,089 Now, one thing to remember is you still, 79 00:02:51,089 --> 00:02:53,316 you need to fill out a FAFSA form to qualify 80 00:02:53,316 --> 00:02:56,776 for any federal loans, so even if you, go ahead. 81 00:02:56,776 --> 00:02:57,428 - [Interviewer] Just so I understand, 82 00:02:57,428 --> 00:02:59,228 so it's even if I don't have financial need, 83 00:02:59,228 --> 00:03:00,727 my family makes a lot of money, 84 00:03:00,727 --> 00:03:02,268 I still fill out the FAFSA just 85 00:03:02,268 --> 00:03:03,860 to get access to federal loans. 86 00:03:03,860 --> 00:03:04,951 - [Sean] Correct, and that's an important 87 00:03:04,951 --> 00:03:07,368 fact that people don't realize. 88 00:03:07,368 --> 00:03:09,816 So there is an unsubsidized Stafford loan 89 00:03:09,816 --> 00:03:12,091 and again, it's not quite as good of terms 90 00:03:12,091 --> 00:03:13,532 as the other two we've talked about, 91 00:03:13,532 --> 00:03:16,634 but it's still a very good option for many families. 92 00:03:16,634 --> 00:03:19,384 - [Interviewer] Okay, so I know that the rates 93 00:03:19,384 --> 00:03:22,451 for the Stafford subsidized and unsubsidized are the same 94 00:03:22,451 --> 00:03:25,098 so what are the actual differences between the two loans? 95 00:03:25,098 --> 00:03:26,328 - [Sean] So the biggest difference is is that 96 00:03:26,328 --> 00:03:28,034 the federal government will not pay the interest 97 00:03:28,034 --> 00:03:29,371 while you're in school. 98 00:03:29,371 --> 00:03:31,088 - [Interviewer] Okay, so they're not gonna cover you. 99 00:03:31,088 --> 00:03:31,912 - [Sean] Right. 100 00:03:31,912 --> 00:03:34,712 - [Interviewer] Okay, and then, are there any other kinds, 101 00:03:34,712 --> 00:03:35,734 you mentioned there was one other kind 102 00:03:35,734 --> 00:03:37,811 of federal loan that's not need-based. 103 00:03:37,811 --> 00:03:40,714 - [Sean] There also is something called a direct plus loans 104 00:03:40,714 --> 00:03:44,335 which a parent can take out instead of the student. 105 00:03:44,335 --> 00:03:46,949 It's in the federal program, so it still 106 00:03:46,949 --> 00:03:49,374 has some of the benefits of that program 107 00:03:49,374 --> 00:03:51,232 but it's a higher rate, but again, 108 00:03:51,232 --> 00:03:53,646 it still has a lot of the other benefits 109 00:03:53,646 --> 00:03:55,053 of the federal program and it's 110 00:03:55,053 --> 00:03:56,631 backed by the federal government. 111 00:03:56,631 --> 00:03:57,400 - [Interviewer] Great, okay, great, so that makes, 112 00:03:57,400 --> 00:03:59,407 those are for the federal government loans. 113 00:03:59,407 --> 00:04:01,636 What about sort of state or college sources. 114 00:04:01,636 --> 00:04:03,248 What are those loans all about? 115 00:04:03,248 --> 00:04:04,913 - [Sean] So again, that really is gonna depend 116 00:04:04,913 --> 00:04:07,073 on the state and it's really gonna depend on the college. 117 00:04:07,073 --> 00:04:09,313 So, those could be very good options. 118 00:04:09,313 --> 00:04:11,751 Personally, when I was in college I had 119 00:04:11,751 --> 00:04:13,783 some of my loans were college loans 120 00:04:13,783 --> 00:04:16,822 and those loans were actually, had no interest rate at all. 121 00:04:16,822 --> 00:04:18,511 So I was basically allowed to borrow, 122 00:04:18,511 --> 00:04:20,298 again, in that example we used before, 123 00:04:20,298 --> 00:04:23,224 I borrowed 5,000 dollars but there was no interest at all. 124 00:04:23,224 --> 00:04:25,092 All I paid back over the life of the loan 125 00:04:25,092 --> 00:04:27,706 was the 5,000 dollars, so college loans 126 00:04:27,706 --> 00:04:29,550 can be a really good opportunity, 127 00:04:29,550 --> 00:04:30,851 but again, not all colleges offer them 128 00:04:30,851 --> 00:04:32,849 and some of them don't have as good of terms 129 00:04:32,849 --> 00:04:34,567 as say the federal government does. 130 00:04:34,567 --> 00:04:35,843 - [Interviewer] Okay, so that's really sort of 131 00:04:35,843 --> 00:04:37,665 state by state, college by college. 132 00:04:37,665 --> 00:04:39,374 There's not sort of a general rule of thumb, 133 00:04:39,374 --> 00:04:40,558 it's just worth looking into. 134 00:04:40,558 --> 00:04:41,417 - [Sean] But it's worth looking into. 135 00:04:41,417 --> 00:04:44,435 The colleges will, if you qualify for them, 136 00:04:44,435 --> 00:04:45,869 they'll give you those options. 137 00:04:45,869 --> 00:04:48,745 At the state level, it's also worth looking into. 138 00:04:48,745 --> 00:04:50,683 The colleges will generally be able to sort 139 00:04:50,683 --> 00:04:52,460 of let you know if you qualify for these loans 140 00:04:52,460 --> 00:04:54,782 and you can decide how good they are for 141 00:04:54,782 --> 00:04:56,431 your family and your situation. 142 00:04:56,431 --> 00:04:57,708 - [Interviewer] Great, and then you mentioned 143 00:04:57,708 --> 00:04:58,963 federal, state, college, and 144 00:04:58,963 --> 00:05:00,181 you also mentioned private loans. 145 00:05:00,181 --> 00:05:02,202 Where do those kind of fall into this equation? 146 00:05:02,202 --> 00:05:05,184 - [Sean] So, I think in terms of the best terms, 147 00:05:05,184 --> 00:05:07,403 the most flexibility, they're probably at the, 148 00:05:07,403 --> 00:05:09,526 you know, they would be my last option. 149 00:05:09,526 --> 00:05:10,887 Now, they could be very good options for a family 150 00:05:10,887 --> 00:05:13,184 that still need money, but I would say 151 00:05:13,184 --> 00:05:14,889 if you've exhausted those other options, 152 00:05:14,889 --> 00:05:18,040 this is, that's probably the next place to go. 153 00:05:18,040 --> 00:05:19,557 You know, they aren't subsidized. 154 00:05:19,557 --> 00:05:21,218 They are not need-based. 155 00:05:21,218 --> 00:05:23,494 And they definitely require, most of them will require 156 00:05:23,494 --> 00:05:25,095 a parent to commit to repay 157 00:05:25,095 --> 00:05:27,012 the loan if the student fails to. 158 00:05:27,012 --> 00:05:30,715 The interest rates will vary by the different institutions. 159 00:05:30,715 --> 00:05:33,316 So, banks, other financial institutions 160 00:05:33,316 --> 00:05:34,429 typically have the highest interest rates 161 00:05:34,429 --> 00:05:37,170 and the least flexible payment options. 162 00:05:37,170 --> 00:05:38,956 - [Interviewer] So then, why wouldn't, as a student, 163 00:05:38,956 --> 00:05:42,069 why wouldn't I just take all Stafford loans 164 00:05:42,069 --> 00:05:44,449 or Stafford subsidized, or you know, 165 00:05:44,449 --> 00:05:46,458 if I didn't qualify, Stafford unsubsidized. 166 00:05:46,458 --> 00:05:49,312 Why would I even bother looking 167 00:05:49,312 --> 00:05:51,046 at something like a private loan. 168 00:05:51,046 --> 00:05:53,296 - [Sean] Well, unfortunately, with a Stafford loan, 169 00:05:53,296 --> 00:05:54,736 right now, in the first year the most you can 170 00:05:54,736 --> 00:05:56,802 take out is 5,500 dollars and you may need 171 00:05:56,802 --> 00:05:58,557 a little bit more than that for loans. 172 00:05:58,557 --> 00:06:00,656 So, you may need to look at other options 173 00:06:00,656 --> 00:06:02,364 and so that's why you would move down. 174 00:06:02,364 --> 00:06:05,161 With a Perkins loan, you may not qualify 175 00:06:05,161 --> 00:06:07,101 because you don't meet the income standards 176 00:06:07,101 --> 00:06:09,039 and for the subsidized Stafford loan, 177 00:06:09,039 --> 00:06:10,419 you may not qualify for that. 178 00:06:10,419 --> 00:06:13,021 So, again, you may, you would definitely 179 00:06:13,021 --> 00:06:14,936 qualify for the unsubsidized loan, 180 00:06:14,936 --> 00:06:16,041 but then if you need a bit more 181 00:06:16,041 --> 00:06:17,526 you may have to go to these other alternatives. 182 00:06:17,526 --> 00:06:18,699 - [Interviewer] I see, so if you kind of pass 183 00:06:18,699 --> 00:06:21,463 that yearly maximum on the Stafford loans, 184 00:06:21,463 --> 00:06:23,460 you don't qualify income-wise for Perkins, 185 00:06:23,460 --> 00:06:26,093 then it'll be down to either a plus loan, 186 00:06:26,093 --> 00:06:27,618 which has a fairly high interest rate, 187 00:06:27,618 --> 00:06:30,077 state or college loan, which kind of varies, 188 00:06:30,077 --> 00:06:31,934 or the private loans, and those can have variable 189 00:06:31,934 --> 00:06:34,255 interest rates and maybe not as good repayment terms. 190 00:06:34,255 --> 00:06:34,873 - [Sean] Right. 191 00:06:34,873 --> 00:06:37,054 - [Interviewer] But it sounds like first and foremost, 192 00:06:37,054 --> 00:06:39,771 if you can get access to Stafford or Perkins, 193 00:06:39,771 --> 00:06:40,770 that's the place to start? 194 00:06:40,770 --> 00:06:42,269 - [Sean] Yes, absolutely. 195 00:06:42,269 --> 00:06:43,957 - [Interviewer] Great, thank you so much.