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New Salem - January 26, 2005

Counselor’s Corner
By
Dr. Gaylynn Becker
National Certified Career Counselor
New Salem & Hebron High Schools

Financial Aid: Part 2 in a Series

Types of Federal Loans
There are various types of loans. Some of the types of federal loans are: Federal Perkins and Federal Nursing Student Loans, Federal Subsidized Stafford Loans, Federal Unsubsidized Stafford Loans, and Parent Loans for Undergraduate Students (PLUS) loans.

Federal Perkins and Federal Nursing Student Loans: These loans are low interest long-term loans which currently are at 5%. Interest and principal are deferred while the student is at least a half-time student. The maximum one can borrow on these are up to $ 3,000. per year for undergraduates and up to $ 5,000 per year for graduate students.

Federal Subsidized Stafford Loan: This is the best type of loan for a student to receive. These loans are awarded to students who have the greatest financial need as a result of information on the Free Application For Student Aid (FAFSA). The interest rate changes each July 1st. However, the interest is subsidized (paid for) by the federal government until six months after graduation, or when a student drops below half-time student status, or drops out of college.

Federal Unsubsidized Stafford Loan: This is similar to the Federal Subsidized Stafford Loan except here the borrower is responsible for the interest while in school, grace, or deferment. If you didn’t see this type of loan on the college financial award package, contact the college.

The Parent Loans for Undergraduate Students (PLUS): This type of loan is offered by some banks, credit unions, and savings and loan institutions.

Do I need collateral when receiving a federal student loan?
No, student Loans of North Dakota (SLND) is the guarantor in case of default, bankruptcy, death, or disability. As a result, the guarantee replaces the collateral requirement. The Bank of North Dakota Student Loan Division can be contacted at 1 (800) 472-2166. If you are calling locally, the number is 328-5660.

Dependent/Independent Student Determination
When is a student considered a dependent and when is the student considered independent of their parents? This is an important frequently asked question. Sometimes it is not easy to answer. Currently, the determination is made based upon the following criteria:

1. Were you born before January 1, 1982?

2. At the beginning of the 2005-2006 school year, will you be working on a master’s or doctorate?

3. As of today, are you married? (Answer “Yes” if you are separated but not divorced.)

4. Do you have children who receive more than half of their support from you?

5. Do you have dependents (other than your children or spouse) who live with you and who receive more than half of their support from you, now and through June 30, 2006?

6. Are both of your parents deceased, or are you (or were you until age 18) a ward/dependent of the court?

7. Are you a veteran of the U.S. Armed Forces?

If you (the student) answered “No” to every question, then you are considered a dependent and your parent’s income and assets are required and included in your determination of need for federal student financial aid.

If you (the student) answered “Yes” to any of the 7 questions, then you are considered independent for purposes of federal financial aid and your determination of financial need is not determined on your parent’s income and assets.

How long will it take until I receive word on my FAFSA application?
About 3 weeks after submitting the completed FAFSA online (about 5 weeks if you submitted a paper copy by mail) the applicant will receive a Student Aid Report (SAR). The SAR is your proof that the FAFSA form was received. The SAR will show your Expected Family Contribution (EFC). The EFC is the amount that you and your parents are expected to contribute toward financing your college education for the coming school year.

For more information on career information and links, please see my Career Planning website at http://www.cplanning.org. If you have any questions on career, counseling, or assessment topics, you can e-mail me at Gaylynn.Becker@sendit.nodak.edu. You can also contact me at New Salem High School at 843-7610, at Hebron High School at 878-4442, or at my residence at 222-3222.

Have an excellent academic day!