This presentation discusses the three types of federal student loans, the differences between them and why you would likely not qualify for two of them. It also reveals the importance of the FAFSA and the tax advantages of financing a college education.

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There Are Only Three
Types Of Student
Loans And You
Won’t Qualify For
Two Of Them
If you or your child is college bound there are
two big questions confronting you. The first is
the “where” and the second is the “how” – or
how you will pay for his or her higher education
(Continued …)
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The best student loan debt is no student loan debt
While the best possible outcome would be for your child to graduate from college with
neither of you having any debt, this has become increasingly difficult. According to the
College Board, the average cost of tuition and fees to attend a state university is now
$8893 for a resident. If your child wants to attend a state university as an out-of-state
state student, the average cost of this is $22,203. And the average cost for attending a
private school now averages $30,094. For that matter, nearly 20 million of us attend
college every year and of that number, close to 12 million – or 60% - borrow annually to
help cover costs. About one-quarter of all borrowers actually end up owing more than
$28,000.
How to avoid borrowing the money
It is possible to avoid student loan debts. In fact, there are four popular ways to do this.
These are scholarships, grants, work grants and work-study programs. Of these, the best
are scholarships and grants because they are basically free money. However, they can be
tough to get. There are some other options as follows but as you will see, they tend to be
“special purpose.”
• Aid for serving in the military or for being the spouse or child of a veteran,
• An Education Award for community service with AmeriCorps,
• Educational and Training Vouchers for current and former foster care youth,
and/or
• Scholarships and loan repayment through the Department of Health and Human
Services’ Indian Health Service, National Institutes of Health, and National
Health Service Corps.
Where to find scholarships and grants
The obvious place to turn for a grant or scholarship is your child's school. But beyond
this there are some other alternatives. Many corporations offer scholarships to the
children of their employees. Nonprofit organizations such as the Elks, Lions, Masons, the
Odd Fellows and the Sycamore Angels Rebekah Lodge also often have scholarships for
the children of their members. And if you check with your state's Department of
Education, you may find that it has scholarships and grants available. For example where
I live, there is the Boettcher Foundation Scholarship, which covers the cost of a Scholar’s
tuition, fees and books for eight semesters/twelve quarters at approved four-year
universities or colleges along with a $2,800 living stipend to help pay the cost of room
and board.

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If borrow you must
In the event that it's just not possible for your child to find a scholarship, grant or work-
study program, you may have no alternative but to get a student loan. Since 2007 there
have been only three types of federal student loans available – Direct Loans, Perkins
Loans and PLUS loans. Unfortunately, you would be able to qualify for only one of these
– a PLUS loan, as it's the only federal loan available to parents of students. The other two
types of loans are only for students. Of course, this is where young people pile on debt by
taking on one of these loans. However, your child may not be able to qualify for one of
them – a Perkins Loan. The reason for this is because it's based on need. In other words
you must be able to demonstrate that you have a legitimate financial need to get the loan.
In comparison, Direct Loans may or may not be need based.
Subsidized versus unsubsidized
Direct loans can be either subsidized or unsubsidized. The difference is that if the loan is
subsidized your child will not be required to pay interest on the loan while he or she is in
school at least halftime. Subsidized Direct Loans are need-based and Perkins loans are
always subsidized. In comparison, Unsubsidized Direct Loans means that you or your
child will be required to pay interest on the loan while in school.
It all depends on your FAFSA
On January 1 of every year, the federal government releases its annual Free Application
for Federal Student Assistance or FAFSA. You'll need to fill out this form unless you
have the money to pay for your child’s education without any type of aid. If you will
need financial aid, you will have to fill out and submit this form. You will need to submit
it to the US Department of Education if you will be applying for a federal loan and to the
school or schools of your child's choice.
Why the FAFSA is crucial
The reason why this form is so important is because the schools your child has applied to
will use it to determine your Expected Family Contribution or EFC. This is the amount
you’re expected to contribute to the price of your child’s education based on a formula
that takes into account your income and assets. The good news of the EFC is that it
doesn’t change regardless of the school your child choses. In other words if your EFC
were $10,000, it would be the same if he or she went to a land gant school or Yale.
Acceptance and award letters
Any college that accepts your school will mail you an acceptance letter and an award
letter. The award letter is what will spell out the financial aid that your child will receive.
It's important to read this letter very carefully. There have been cases where families have
got very excited when they saw that their child would receive $5000 or more in financial
aid – only to discover that the “financial aid” was actually a loan. Despite what a college

4. Helpful Financial Information from National Debt Relief …
or university might lead you to believe, if you want a federal loan you need only to fill
out the FAFSA. However, if you're looking for aid from the school itself you may also be
required to fill out a CSS Financial Aid PROFILE or if your son or daughter is applying
to a very top-level, private school, you may be required to fill out its own application for
financial aid.
The tax advantages of paying for your child's higher education
You should be pleased to learn that there are at least some tax benefits to paying for your
child's college. In fact, there are two tax credits available that would help offset the cost
of your child’s tuition, fees, books, supplies, and equipment. They do this by reducing the
amount of your income tax. They are:
·
• The American Opportunity Credit allows you to claim up to $2,500 per
student per year for the first four years of school as your student works toward
a degree or similar credential.
• The Lifetime Learning Credit allows you to claim up to $2,000 per student
per year for any college or career school tuition and fees, as well as for books,
supplies, and equipment that were required for the course and had to be
purchased from the school.
In addition, if you take out student loans for your child, your spouse or yourself, you can
take a tax deduction for the interest that you paid on it. This applies to all loans (not just
federal student loans) that are used to pay for higher education expenses. The maximum
deduction is capped at $2500 a year. And while that $2500 probably won't pay for a year
of your child's college, it should certainly help.
Have a heart-to-heart talk
If your child has been admitted to several different schools, it's important that you have a
heart-to-heart talk about the schools and what they cost. We know that it's hard to say
"no" to your child because you want to give him or her everything you can – but a very
expensive college might be outside the "everything you can" category While it used to be
that graduating from a very prestigious university automatically resulted in a very
lucrative job, this is no longer as true as it was just several years ago. For that matter, you
might suggest that your child do what many young people are doing these days and that is
attend a less expensive college for his or her first two years and then transfer to that more
prestigious school. Or depending on your child's career goals, it might make good sense
for him or her to attend an inexpensive school while saving enough money to go to grad
school at a very prestigious college.
In case you are having a problem with your student loans, National Debt Relief has a program
that can provide you with consultation services. Their trained experts can advise you about you
student loan repayment options based on the type of debt that you have and your employment

5. Helpful Financial Information from National Debt Relief …
situation. They will even help you with the paper work involved. This service has a one time fee
that will be placed in an escrow account. When you are satisfied with the service and the
documentations done on your behalf, that is the only time the fee can be released. There is no
upfront or recurring maintenance fee.

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Does this sound familiar?
• You are tired of worrying about money…
• You are losing sleep due to mounting credit
card debt…
• You are fighting with your partner about the
bills…
• You are living paycheck to paycheck…
• You are falling behind on your debts…
• You are losing hope…
It’s time to talk with National Debt Relief!
Call Toll Free 1-888-275-4499
Or Go To
http://www.nationaldebtrelief.com/free-student-
loans-quote-now/?src=PDFs