What Is A Federal Student Loan: Fill & Download for Free

In the US, it’s student loans.Of course, this bubble has been well documented and warned about for a few years now:This Economic Bubble Is Going to Wreak Havoc When It BurstsYet, people keep taking out student loans, often times for college degrees that they will never actually use. That is, they will end up with jobs that didn’t require that degree in the first place.And you can’t get your federal student loans cast off in bankruptcy like you used to be able to. If you default on them, they will garnish your wages and withhold any tax refunds until they are paid back. For some people, that’s the majority of their adult life.Here’s what happens if you default on your student loansAbout six years ago, my daughter took a summer class at the School of the Art Institute of Chicago. She was in middle school. She was doing it for fun. Now that she’s a senior, the School of the Art Institute of Chicago has her on their mailing list. They send her flyers and brochures almost every week, trying to get her to go to college there. For just $50,000 a year, she can, after four years, get a B.A. in Fine Arts from one of the best Arts colleges in the world.Then spend the rest of her life paying down that $200,000 debt, plus interest, hating herself for wasting so much money on such a worthless degree every time she gets her Starbucks paycheck.

How much student loans do I need?Instead of asking “How much student loans can I get?” consider how much you really need.The answer to this question is going to be different for each individual. Depending on your school’s tuition, room and board, books, and living costs, your college expenses could differ wildly from someone else’s. CollegeBoard’s tool to calculate how much college will cost. Student loans aren’t limitless. The maximum amount you can borrow depends on factors including whether they’re federal or private loans and your year in school. Undergraduates can borrow up to $12,500 annually and $57,500 total in federal student loans. Graduate students can borrow up to $20,500 annually and $138,500 total. But just because you can borrow that much doesn’t mean you should. To keep higher education affordable, calculate how much you should borrow for college based on your expected future earnings and aim to keep your student borrowing below that amount.You can also borrow less if you get grants, scholarships, and other student aid that doesn’t have to be repaid. The FAFSA4Caster tool can help you estimate how much federal aid you’re likely to receive, and how much you’ll have to finance with loans.How Much Money You Can BorrowThere are two types of student loans available—federal and private. It is best to maximize the amount of money borrowed through federal student loans first before turning to private lenders. Current federal student loan lending limits are illustrated in the graph below, with a description to follow:Federal student loan limitsThe first type of loan that students should consider is federal student loans, which are offered through and guaranteed through the Direct Loan Program. This program offers four types of Direct Loans, and caps how much you can borrow with each under the following rules:Annual limits: The maximum amount of that the borrower can take out in an academic year.Aggregate limits: The maximum cumulative amount that a borrower can borrow in student loans.Cost of attendance: In addition to annual and aggregate limits, the federal government also limits loans by your costs. It will not allow borrowers to take out more student loans than their college program costs.How much student loans you can get, specifically, will vary by your student status. For example, the Direct Loan program lends less to students who are dependents (per FAFSA guidelines), or who are in their first or second year of college. For independent students and upperclassman, the borrowing limits are higher.Here are the federal student loan limits for different types of Direct Loans.Type of federal student loanWho can get this loan?Annual loan limitAggregate limitDirect Subsidized LoansUndergrads with demonstrated financial need$3,500 for freshmen, up to $5,500 for upperclassmen$23,000Direct Unsubsidized Loans*Undergrads$5,500 for dependent freshmen, up to $12,500 for independent upperclassmen$57,500Direct Unsubsidized Loans* (graduate students)Graduate and professional students$20,500$138,500PLUS LoansGraduate and professional students, and parents of undergraduatesCost of attendance (after all other student aid is applied)NoneTo access these federal student loans, you’ll need to file a FAFSA. The colleges you’ve applied to use your FAFSA information to evaluate your need and eligibility for federal student aid, including loans. Next, these colleges will send you financial aid award letters outlining what kinds of aid you can get.So as you want to know how much student loans you can get, pay attention to this letter. It will list the types and amounts of federal student loans you’re being offered.Private student loan limitsPrivate student loans are offered by banks and lenders directly to students and their parents. They aren’t part of the federal government’s programs, so they won’t have the same rules for how much student loans you can get.This can actually be good news for students who have hit their federal student loan limits and still have costs to cover. For instance, if you go to a more expensive university and pay a higher tuition, those federal student loans won’t go as far. In these cases, private student loans can help to cover any leftover costs.What you can borrow with private student loans will also vary by lender, as each bank will have its own lending rules. Here’s what private lenders will look at when deciding on your student loan amount:Lenders’ limits or guidelines: Each bank or lender will have its own limits on annual borrowing, while others may just have a certain maximum yearly amount you can borrow. Citizens Bank’s private student loans, for example, are limited at $100,000 for undergraduates.Credit qualifications: Lenders might limit student loan amounts based on your qualifications for a loan, too. You’ll need good credit to get a private student loan, for example. If you do not have any credit history you’ll likely need a parent or trusted adult cosign the loan for you.Education and employment: Private lenders might also limit loan amounts to what they determine will be affordable. To figure this out, they might look at details such as the type of degree you’re earning, and your cosigner’s income.Cost of attendance: Lastly, most private lenders will also consider your cost of attendance when deciding how much student loans you can get from them. Many will offer financing of up to 100% of your cost of attendance, but few private lenders will let you borrow more than what your program costs.

Forgiving all student loans would create winners and losers, which is political suicide.All the people who made the final payment on their student loan the month before they were forgiven would be furious, because they would have been responsible for repaying every dollar of their debt.All the people who didn’t go to college, or who discontinued their studies, or who went to a less-expensive university so to not incur a huge student loan debt would be sad (and maybe also furious) because they coulda, woulda, shoulda gone ahead if only they’d known.The federal government has no power to forgive private loans, but only loans made on the federally insured student loan program. Some students would be left dragging substantial amounts of debt into their adult lives, while their cohorts were freed of their burden. Expect these people to be very unhappy about the cruel twist of fate.A substantial new obligation would be added to the national debt with a stroke of a pen. This obligation would also become an “entitlement” because next years’ students would want to be debt-free too. Every college and university would be tempted to ramp up tuition to get on the gravy train. Universities would be happy, but John Q. Taxpayer might well be very angry.Everyone who had financed a relatively lavish student lifestyle by racking up student loan debt would be dancing in the streets. Their poor life choices would have been rewarded. These people would then spend the rest of their lives continuing to make bad choices, in hopes the government would bail them out like it did the last time.I don’t know how the student debt crisis can be “fixed”, but I doubt forgiving student loans is a feasible or desirable way to do it.