NGPF Activity Bank
Paying for College
REVIEW: Understanding the Types of Student Loans
When used responsibly, student loans can be the key to unlocking a college education and
brighter future. To make sure you are making financially smart decisions, you have to do your
research and understand the types and conditions of
the different student loan options available to you.
PART I: Federal vs Private Loans
Let’s first take a look at the differences between
Federal and Private loans.
❏ Review the differences between the types of
student loans using
https://studentaid.gov/understand-aid/types/loans/federal-vs-private.
1. Which type of loan… FEDERAL or PRIVATE
a. Offers flexible monthly payments: FEDERAL
b. Likely has a set repayment plan that you won’t be able to change: federal
c. Can often require payments while you are still in school: private
d. Has a fixed interest rate: federal
e. Has an interest rate that could change: private
f. Is not subsidized (meaning only YOU pay the interest): private
g. Is available as a subsidized loan (meaning the GOVERNMENT helps pay the interest):
public
h. Does not require a credit check: private
i. Requires a credit check and a cosigner: federal
j. Does not have any prepayment penalty fees: private
2. Explain the main differences between Federal and Private student loans.
Federal is better because interest rate doesn’t increase but if your you can’t get a federal
loan a private works too.
PART II: Types of Federal Loans
Let’s now look specifically at Federal loans.
www.ngpf.org Last updated: 9/22/20
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❏ Watch this video to compare the 3 types of Federal loans
❏ Take notes in the chart below.
Subsidized Direct Unsubsidized Direct Direct PLUS Loans
Loans Loans
Interest Rate fixed fixed fixed
Who Pays the The government YOU YOU
Interest?
Who is eligible You are Parents You
for this loan?
3. Type TRUE or FALSE for each statement regarding Federal loans.
a. Undergraduate students cannot take out a Direct PLUS loan; only parents of
dependent undergraduate students or graduate/professional students can.
false
b. A subsidized loan is one where the government pays for the interest while the
student is still enrolled in school.
True
c. An unsubsidized loan is one where the borrower pays the interest while the student
is still enrolled in school.
False
4. Which of the three federal loan types is available to the most people? Why?
An unsubsidized loan because not everyone is still going to school.
PART III: Types of Private Loans
Now we’re going to look more closely at private loans. Go to this CFPB page and use the article to
answer the questions below.
5. What are three alternatives to pay for college that you should explore before taking out a
private student loan?
You should fill out a FAFSA and you would have to look for grants and scholarships
www.ngpf.org Last updated: 9/22/20
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6. Why does the Consumer Financial Protection Bureau suggest you explore alternatives
before taking out a private student loan?
It recommended that because it’s free money you don't have to pay back.
PART IV: Reflection
Now that you’ve reviewed all the different kinds of student loans, let’s reflect a little bit on what
this means for students deciding what types of loans to seek.
7. Why should every student explore federal student loan options before private loan options?
They should explore federal loans because they don’t have interest
8. What three pieces of advice would you offer to a student who knows they will need loans to
pay for college?
Get a federal loan
Apply for scholarships
Fill out your FAFSA
www.ngpf.org Last updated: 9/22/20
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