WEBVTT 00:00:00.095 --> 00:00:01.413 - [Interviewer] We're here today with Sean Logan, 00:00:01.413 --> 00:00:04.046 director of college counseling at Phillips Academy. 00:00:04.046 --> 00:00:07.378 Sean, one of the big decisions that students face 00:00:07.378 --> 00:00:09.715 is that of student loans when they're going 00:00:09.715 --> 00:00:11.796 through the college admissions process. 00:00:11.796 --> 00:00:13.684 Can you kind of explain to me where are 00:00:13.684 --> 00:00:15.103 the different places I can get loans 00:00:15.103 --> 00:00:17.739 and then how that impacts what those options are? 00:00:17.739 --> 00:00:19.363 - [Sean] Sure, so the government is 00:00:19.363 --> 00:00:22.207 probably the best source of loans right now. 00:00:22.207 --> 00:00:26.617 And, you know, there's also smaller state loan 00:00:26.617 --> 00:00:29.952 programs that are out there, and that varies by states. 00:00:29.952 --> 00:00:31.019 - [Interviewer] So that's sort of the federal government, 00:00:31.019 --> 00:00:32.320 then there's the state government. 00:00:32.320 --> 00:00:32.970 - [Sean] Yep. 00:00:32.970 --> 00:00:33.366 - [Interviewer] Okay. 00:00:33.366 --> 00:00:34.493 - [Sean] There are colleges that will 00:00:34.493 --> 00:00:36.803 do their own institutional loans 00:00:36.803 --> 00:00:39.903 and then there are private institutions that will do loans. 00:00:39.903 --> 00:00:42.320 - [Interviewer] Okay, and of all these 00:00:42.320 --> 00:00:45.198 different options, where should I begin? 00:00:45.198 --> 00:00:47.718 - [Sean] So, with your financial aid package, 00:00:47.718 --> 00:00:49.679 colleges will help you sort of understand this, 00:00:49.679 --> 00:00:52.181 but in general, colleges are gonna use a lot 00:00:52.181 --> 00:00:54.115 of federal money at first and try to package 00:00:54.115 --> 00:00:56.055 you that way, and again, it's generally the best 00:00:56.055 --> 00:00:57.980 type of loan you can get. 00:00:57.980 --> 00:01:00.222 There are need-based loans that are out there 00:01:00.222 --> 00:01:03.253 so you have to have certain levels of income to qualify. 00:01:03.253 --> 00:01:06.352 The first being that the Federal Perkins loan 00:01:06.352 --> 00:01:09.119 generally for more lower income students. 00:01:09.119 --> 00:01:12.242 That has a lot of really positive perks to it. 00:01:12.971 --> 00:01:16.002 They include things like a fixed rate. 00:01:16.002 --> 00:01:18.430 It has no origination fee. 00:01:19.114 --> 00:01:21.705 You have the flexibility with the government 00:01:21.705 --> 00:01:24.086 paying all of the interest until six months 00:01:24.086 --> 00:01:27.382 after you graduate, so that's a great factor for that. 00:01:27.382 --> 00:01:27.975 - [Interviewer] Okay, so you're not gonna 00:01:27.975 --> 00:01:29.438 pay any interest while you're in school. 00:01:29.438 --> 00:01:31.133 - [Sean] While you're in school, 00:01:31.133 --> 00:01:32.758 and you do have, again, some flexibile terms 00:01:32.758 --> 00:01:36.066 with deferring that if you go to graduate school. 00:01:36.066 --> 00:01:37.786 And again, you can take out in your 00:01:37.786 --> 00:01:39.677 first year up to 5,500 dollars, uh, 00:01:39.677 --> 00:01:42.058 you can take out up to 5,500 dollars as an undergraduate 00:01:42.058 --> 00:01:43.279 for the Federal Perkins loans. 00:01:43.279 --> 00:01:46.170 - [Interviewer] Okay, and that's up to 5,500? 00:01:46.170 --> 00:01:48.191 And is that per year or overall? 00:01:48.191 --> 00:01:49.792 - [Sean] Uh, a year. 00:01:49.792 --> 00:01:50.988 - [Interviewer] Okay, got it. 00:01:50.988 --> 00:01:52.839 Are there any other kind of need-based loans 00:01:52.839 --> 00:01:54.487 that are available from the federal government? 00:01:54.487 --> 00:01:55.091 - [Sean] There are, so there's 00:01:55.091 --> 00:01:57.539 also subsidized Stafford loans. 00:01:57.539 --> 00:01:59.167 They're not quite as good terms 00:01:59.167 --> 00:02:02.012 as the Perkins loans, but again, still very good. 00:02:02.012 --> 00:02:04.879 Probably the next best loan you'll find out there. 00:02:04.879 --> 00:02:08.315 There is an origination fee to that. 00:02:08.315 --> 00:02:10.362 Right now, the interest rate is actually 00:02:10.362 --> 00:02:13.267 a little bit lower than the Perkins loan, 00:02:13.267 --> 00:02:16.309 but that will go up depending on the markets. 00:02:16.309 --> 00:02:17.469 Again, it has the same maximum 00:02:17.469 --> 00:02:21.906 of 5,500 dollars per, for this year, for your first year. 00:02:21.906 --> 00:02:23.624 - [Interviewer] And is that 5,500, does it stay 5,500 00:02:23.624 --> 00:02:25.216 every year or does that change? 00:02:25.216 --> 00:02:28.024 - [Sean] So that can go up as you're a sophomore, 00:02:28.024 --> 00:02:30.278 junior, or senior, that amount can go up. 00:02:30.278 --> 00:02:32.901 So you have a little bit more flexibility with that. 00:02:33.285 --> 00:02:35.831 And the subsidized Stafford, also, 00:02:35.831 --> 00:02:37.049 their interest rate is also paid for 00:02:37.049 --> 00:02:39.791 by the government until six months after you graduate. 00:02:39.791 --> 00:02:40.487 - [Interviewer] I see, so that's also 00:02:40.487 --> 00:02:42.145 no interest paid while in school. 00:02:42.145 --> 00:02:43.806 - [Sean] Correct. 00:02:43.806 --> 00:02:45.642 - [Interviewer] Are there any loans that 00:02:45.642 --> 00:02:48.380 the federal government offers that aren't need-based? 00:02:48.380 --> 00:02:48.984 - [Sean] There are. 00:02:48.984 --> 00:02:51.089 Now, one thing to remember is you still, 00:02:51.089 --> 00:02:53.316 you need to fill out a FAFSA form to qualify 00:02:53.316 --> 00:02:56.776 for any federal loans, so even if you, go ahead. 00:02:56.776 --> 00:02:57.428 - [Interviewer] Just so I understand, 00:02:57.428 --> 00:02:59.228 so it's even if I don't have financial need, 00:02:59.228 --> 00:03:00.727 my family makes a lot of money, 00:03:00.727 --> 00:03:02.268 I still fill out the FAFSA just 00:03:02.268 --> 00:03:03.860 to get access to federal loans. 00:03:03.860 --> 00:03:04.951 - [Sean] Correct, and that's an important 00:03:04.951 --> 00:03:07.368 fact that people don't realize. 00:03:07.368 --> 00:03:09.816 So there is an unsubsidized Stafford loan 00:03:09.816 --> 00:03:12.091 and again, it's not quite as good of terms 00:03:12.091 --> 00:03:13.532 as the other two we've talked about, 00:03:13.532 --> 00:03:16.634 but it's still a very good option for many families. 00:03:16.634 --> 00:03:19.384 - [Interviewer] Okay, so I know that the rates 00:03:19.384 --> 00:03:22.451 for the Stafford subsidized and unsubsidized are the same 00:03:22.451 --> 00:03:25.098 so what are the actual differences between the two loans? 00:03:25.098 --> 00:03:26.328 - [Sean] So the biggest difference is is that 00:03:26.328 --> 00:03:28.034 the federal government will not pay the interest 00:03:28.034 --> 00:03:29.371 while you're in school. 00:03:29.371 --> 00:03:31.088 - [Interviewer] Okay, so they're not gonna cover you. 00:03:31.088 --> 00:03:31.912 - [Sean] Right. 00:03:31.912 --> 00:03:34.712 - [Interviewer] Okay, and then, are there any other kinds, 00:03:34.712 --> 00:03:35.734 you mentioned there was one other kind 00:03:35.734 --> 00:03:37.811 of federal loan that's not need-based. 00:03:37.811 --> 00:03:40.714 - [Sean] There also is something called a direct plus loans 00:03:40.714 --> 00:03:44.335 which a parent can take out instead of the student. 00:03:44.335 --> 00:03:46.949 It's in the federal program, so it still 00:03:46.949 --> 00:03:49.374 has some of the benefits of that program 00:03:49.374 --> 00:03:51.232 but it's a higher rate, but again, 00:03:51.232 --> 00:03:53.646 it still has a lot of the other benefits 00:03:53.646 --> 00:03:55.053 of the federal program and it's 00:03:55.053 --> 00:03:56.631 backed by the federal government. 00:03:56.631 --> 00:03:57.400 - [Interviewer] Great, okay, great, so that makes, 00:03:57.400 --> 00:03:59.407 those are for the federal government loans. 00:03:59.407 --> 00:04:01.636 What about sort of state or college sources. 00:04:01.636 --> 00:04:03.248 What are those loans all about? 00:04:03.248 --> 00:04:04.913 - [Sean] So again, that really is gonna depend 00:04:04.913 --> 00:04:07.073 on the state and it's really gonna depend on the college. 00:04:07.073 --> 00:04:09.313 So, those could be very good options. 00:04:09.313 --> 00:04:11.751 Personally, when I was in college I had 00:04:11.751 --> 00:04:13.783 some of my loans were college loans 00:04:13.783 --> 00:04:16.822 and those loans were actually, had no interest rate at all. 00:04:16.822 --> 00:04:18.511 So I was basically allowed to borrow, 00:04:18.511 --> 00:04:20.298 again, in that example we used before, 00:04:20.298 --> 00:04:23.224 I borrowed 5,000 dollars but there was no interest at all. 00:04:23.224 --> 00:04:25.092 All I paid back over the life of the loan 00:04:25.092 --> 00:04:27.706 was the 5,000 dollars, so college loans 00:04:27.706 --> 00:04:29.550 can be a really good opportunity, 00:04:29.550 --> 00:04:30.851 but again, not all colleges offer them 00:04:30.851 --> 00:04:32.849 and some of them don't have as good of terms 00:04:32.849 --> 00:04:34.567 as say the federal government does. 00:04:34.567 --> 00:04:35.843 - [Interviewer] Okay, so that's really sort of 00:04:35.843 --> 00:04:37.665 state by state, college by college. 00:04:37.665 --> 00:04:39.374 There's not sort of a general rule of thumb, 00:04:39.374 --> 00:04:40.558 it's just worth looking into. 00:04:40.558 --> 00:04:41.417 - [Sean] But it's worth looking into. 00:04:41.417 --> 00:04:44.435 The colleges will, if you qualify for them, 00:04:44.435 --> 00:04:45.869 they'll give you those options. 00:04:45.869 --> 00:04:48.745 At the state level, it's also worth looking into. 00:04:48.745 --> 00:04:50.683 The colleges will generally be able to sort 00:04:50.683 --> 00:04:52.460 of let you know if you qualify for these loans 00:04:52.460 --> 00:04:54.782 and you can decide how good they are for 00:04:54.782 --> 00:04:56.431 your family and your situation. 00:04:56.431 --> 00:04:57.708 - [Interviewer] Great, and then you mentioned 00:04:57.708 --> 00:04:58.963 federal, state, college, and 00:04:58.963 --> 00:05:00.181 you also mentioned private loans. 00:05:00.181 --> 00:05:02.202 Where do those kind of fall into this equation? 00:05:02.202 --> 00:05:05.184 - [Sean] So, I think in terms of the best terms, 00:05:05.184 --> 00:05:07.403 the most flexibility, they're probably at the, 00:05:07.403 --> 00:05:09.526 you know, they would be my last option. 00:05:09.526 --> 00:05:10.887 Now, they could be very good options for a family 00:05:10.887 --> 00:05:13.184 that still need money, but I would say 00:05:13.184 --> 00:05:14.889 if you've exhausted those other options, 00:05:14.889 --> 00:05:18.040 this is, that's probably the next place to go. 00:05:18.040 --> 00:05:19.557 You know, they aren't subsidized. 00:05:19.557 --> 00:05:21.218 They are not need-based. 00:05:21.218 --> 00:05:23.494 And they definitely require, most of them will require 00:05:23.494 --> 00:05:25.095 a parent to commit to repay 00:05:25.095 --> 00:05:27.012 the loan if the student fails to. 00:05:27.012 --> 00:05:30.715 The interest rates will vary by the different institutions. 00:05:30.715 --> 00:05:33.316 So, banks, other financial institutions 00:05:33.316 --> 00:05:34.429 typically have the highest interest rates 00:05:34.429 --> 00:05:37.170 and the least flexible payment options. 00:05:37.170 --> 00:05:38.956 - [Interviewer] So then, why wouldn't, as a student, 00:05:38.956 --> 00:05:42.069 why wouldn't I just take all Stafford loans 00:05:42.069 --> 00:05:44.449 or Stafford subsidized, or you know, 00:05:44.449 --> 00:05:46.458 if I didn't qualify, Stafford unsubsidized. 00:05:46.458 --> 00:05:49.312 Why would I even bother looking 00:05:49.312 --> 00:05:51.046 at something like a private loan. 00:05:51.046 --> 00:05:53.296 - [Sean] Well, unfortunately, with a Stafford loan, 00:05:53.296 --> 00:05:54.736 right now, in the first year the most you can 00:05:54.736 --> 00:05:56.802 take out is 5,500 dollars and you may need 00:05:56.802 --> 00:05:58.557 a little bit more than that for loans. 00:05:58.557 --> 00:06:00.656 So, you may need to look at other options 00:06:00.656 --> 00:06:02.364 and so that's why you would move down. 00:06:02.364 --> 00:06:05.161 With a Perkins loan, you may not qualify 00:06:05.161 --> 00:06:07.101 because you don't meet the income standards 00:06:07.101 --> 00:06:09.039 and for the subsidized Stafford loan, 00:06:09.039 --> 00:06:10.419 you may not qualify for that. 00:06:10.419 --> 00:06:13.021 So, again, you may, you would definitely 00:06:13.021 --> 00:06:14.936 qualify for the unsubsidized loan, 00:06:14.936 --> 00:06:16.041 but then if you need a bit more 00:06:16.041 --> 00:06:17.526 you may have to go to these other alternatives. 00:06:17.526 --> 00:06:18.699 - [Interviewer] I see, so if you kind of pass 00:06:18.699 --> 00:06:21.463 that yearly maximum on the Stafford loans, 00:06:21.463 --> 00:06:23.460 you don't qualify income-wise for Perkins, 00:06:23.460 --> 00:06:26.093 then it'll be down to either a plus loan, 00:06:26.093 --> 00:06:27.618 which has a fairly high interest rate, 00:06:27.618 --> 00:06:30.077 state or college loan, which kind of varies, 00:06:30.077 --> 00:06:31.934 or the private loans, and those can have variable 00:06:31.934 --> 00:06:34.255 interest rates and maybe not as good repayment terms. 00:06:34.255 --> 00:06:34.873 - [Sean] Right. 00:06:34.873 --> 00:06:37.054 - [Interviewer] But it sounds like first and foremost, 00:06:37.054 --> 00:06:39.771 if you can get access to Stafford or Perkins, 00:06:39.771 --> 00:06:40.770 that's the place to start? 00:06:40.770 --> 00:06:42.269 - [Sean] Yes, absolutely. 00:06:42.269 --> 00:06:43.957 - [Interviewer] Great, thank you so much.