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Section 8.4 Student Loans
Objectives
• Explain the types of student loans.
• Defi ne the methods of student loan repayment.
• Defi ne various means for paying for college.
Terms
• Free Application
for Federal
Student Aid
(FAFSA)
• grant
• scholarship
• merit-based
scholarship
• 529 plan
Build Your Math Skills
Review these math skills to prepare for the lesson that follows.
1. Convert percentages to decimals by moving the decimal two places to
the left. Example: 5.35% → 0.0535
A. 8.1% → B. 9.75% →
C. 6.3% → D. 7.65% →
2. Multiply decimals. Round to the nearest cent ($0.01) if necessary. Example:
$1,265 × 0.055 = $69.58
A. $1,675 × 0.05 = B. $955 × 0.0475 =
C. $2,450 × 0.07 = D. $2,050 × 0.085 =
3. Add and subtract decimals. Example: $2,534.18 – ($975 + $414.50) =
$1,144.68
A. $1,784.36 – ($375 + $718.35) = B. $1,450 – ($875 + $105.50) =
C. $1,650.75 – ($576 + $819.35) = D. $2,657.75 – ($425.65 + $830.84) =
L oan O ptions
Student loans are one way to pay for education beyond high school. For
most students, borrowing some or all of the money to pay for college is the way
they choose to fi nance their education. Student loans are diff erent than standard
loans because they have special features that make them ideal for students. For
example, student loans typically off er lower interest rates and you may be able to
postpone making payments until after graduation.
Student loan options vary based on fi nancial need. The fi nancial condition of
the student’s family is considered when determining the kind of loan for which a
student qualifi es. The following formula can be used to determine student loan
eligibility:
student loan eligibility = total tuition and fees × student loan eligibility rate
Families must complete a special form called a Free Application for Federal
Student Aid. The Free Application for Federal Student Aid (FAFSA) is a form
issued by the federal government that is used by schools to determine a