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Student Loans & FAFSA Guide Cheat Sheet
A printable reference covering FAFSA, student loan types, interest, repayment plans, borrowing limits, and aid comparison for grades 11-12.
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This cheat sheet explains how students use the FAFSA to apply for federal financial aid and compare options for paying for college or career training. It focuses on grants, scholarships, work-study, federal loans, and private loans so students can see which options usually cost the least. Students need this guide because borrowing decisions made before college can affect budgets for many years after graduation. The most important ideas are to file the FAFSA early, borrow only what is needed, and understand how interest increases the total amount repaid. Federal student loans often have stronger borrower protections than private loans, including fixed rates, income-driven repayment options, and possible forgiveness programs. A smart aid comparison looks at net cost, loan amount, interest rate, monthly payment, and total repayment cost.
Key Facts
- FAFSA stands for Free Application for Federal Student Aid, and it should never require a fee to submit.
- Net cost = total cost of attendance - grants - scholarships - other gift aid.
- Simple interest for a loan period can be estimated with interest = principal x annual interest rate x time in years.
- Total repayment = principal borrowed + interest paid + fees, so the amount repaid is usually greater than the amount borrowed.
- Monthly loan payment should fit your future budget, and a common guideline is total student loan debt should not exceed your expected first-year salary.
- Subsidized federal loans do not charge the student interest while enrolled at least half time, during the grace period, and during approved deferment.
- Unsubsidized federal loans begin accruing interest as soon as the loan is disbursed, even while the student is still in school.
- Private loans usually require a credit check or cosigner and may have fewer repayment protections than federal student loans.
Vocabulary
- FAFSA
- The FAFSA is the free federal form used to apply for grants, work-study, and federal student loans.
- Grant
- A grant is financial aid that usually does not need to be repaid if the student meets the program rules.
- Scholarship
- A scholarship is gift aid awarded for reasons such as grades, talent, service, identity, or financial need.
- Principal
- Principal is the original amount of money borrowed before interest is added.
- Interest Rate
- The interest rate is the percentage charged for borrowing money, usually stated as an annual rate.
- Loan Servicer
- A loan servicer is the company that manages billing, payments, and account questions for a student loan.
Common Mistakes to Avoid
- Waiting too long to submit the FAFSA is a mistake because some aid is limited and may be awarded on a first-come, first-served basis.
- Borrowing the full loan amount offered is a mistake because the offer may be more than the student actually needs and every borrowed dollar can add interest.
- Comparing schools by sticker price only is a mistake because the better comparison is net cost after grants, scholarships, and other gift aid.
- Ignoring interest while in school is a mistake because unsubsidized and many private loans can grow before repayment officially begins.
- Choosing a private loan before checking federal loan options is a mistake because federal loans often have fixed rates and more flexible repayment protections.
Practice Questions
- 1 A college costs 9,000 in grants and $4,000 in scholarships. What is the student's net cost for the year?
- 2 A student borrows $5,500 at a 6% annual interest rate for one year. Using simple interest, how much interest accrues in one year?
- 3 A student is offered 2,000 in unsubsidized loans. If the student needs to borrow only $4,000, which loan amounts should the student accept first and why?
- 4 Explain why two colleges with the same tuition might lead to very different borrowing needs for the same student.