How does a loan work?

College Search & Selection
1

<p>I'm a Junior in High school now, but I'm going to be applying to college in a year and I haven't really thought about tuition. I'm no genius so I'm not getting a full ride, and my parents make somewhere between 50-75k a year but they are really really bad with money. They literally have nothing saved and I have a brother so they can't focus everything on me. I'm set on traveling and living far away from home, but I never thought of how I'd pay. I realize University of Maryland is a good school, but I want something much smaller and south or west coast. </p>

<p>So is taking out a loan an option? And if it is will I get a ton of interest or something because I know I'm not going to have 100k+ after college to pay back, let alone a house or something</p>

2

<p>The best people to help you with this post in the Financial Aid Forum. You should take your question there.</p>

<p>Many families with annual incomes in the 50-75k range have no college savings for their children. Don’t feel bad about your parents. Maybe they are bad with money, and spend it on truly frivolous things, but chances are that it all goes toward keeping your family afloat. You can help your parents a lot, by printing out <a href=“http://www.ifap.ed.gov/efcformulaguide/attachments/111609EFCFormulaGuide20102011.pdf[/url]”>http://www.ifap.ed.gov/efcformulaguide/attachments/111609EFCFormulaGuide20102011.pdf&lt;/a&gt; They can work through this to find out what their FAFSA EFC is likely to be. That will tell them what the minimum amount is that most colleges/universities will expect them to pay.</p>

<p>You also need to read through [FinAid</a>! Financial Aid, College Scholarships and Student Loans](<a href=“http://www.finaid.org%5DFinAid”>http://www.finaid.org) so that you can learn how financial aid packages are constructed, and so that you can find out more about student loans.</p>

<p>Good luck!</p>

3

<p>When you’re constructing your college list, you’ll want to be aware of the criteria for and types of financial aid the school awards…these fall into two broad categories of need-based and merit-based aid but there is often some overlap. Some schools are very good at providing need-based aid and a small number guarantee to meet full need (see link below). </p>

<p>Need is generally defined as the Cost of Attendance minus the Expected Family Contribution. Expected Family Contribution, or EFC, is determined by the FAFSA and, for around 300 schools, by the CSS Profile. Federal and state aid is based on FAFSA. Institutional aid can be based on FAFSA or Profile, so it’s important to know what the school’s filing requirements are and very important to meet all of their deadlines…every single year! </p>

<p>Typical federal loans (aka Federal Direct, or Stafford loans) are capped at $27K for four years of undergrad study, or $31K. Many students manage to graduate with debt under $30K through a combination of need and merit-based aid and loans. You can find many threads here listing schools that offer merit scholarships…you don’t necessarily need a full ride or even a full tuition scholarship (although that would be nice!) in order to find affordable schools. </p>

<p>The schools that guarantee to meet, and details/restrictions on these, can be found at:
[Project</a> on Student Debt: Financial Aid Pledges](<a href=“http://projectonstudentdebt.org/pc_institution.php]Project”>http://projectonstudentdebt.org/pc_institution.php)</p>