Section 8.4 Student Loans
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student’s need for fi nancial aid. The information required on the FAFSA is similar
to the information required for a tax return. In addition to the FAFSA form, the
FAFSA website also has a great deal of information about ways to fund your post-
high school education.
There are diff erent types of student loans. Some loans, like the Perkins Loan,
require that the student demonstrate a higher-than-average fi nancial need.
Staff ord loans are easier to receive and are also based on need. PLUS loans off er
higher loan amounts, but the loan is made to a parent or guardian, rather than to
the student.
Example 8-4A
See It
Carlota is attending her local community college and has applied for
fi nancial aid. Based on her family’s income, the college’s fi nancial aid offi ce
estimates that her family should pay for 35% of the $2,780 that one year of tuition
and fees will cost. Carlota is eligible for student loans for the remaining portion of
her tuition and fees. How much in student loans is Carlota eligible for?
Strategy
Use the formula:
student loan eligibility = total tuition and fees × student loan eligibility rate
Solution
Step 1: Determine the percentage of the total tuition and fees that Carlota’s
family does not have to pay. Subtract the percentage that her family should pay
from 100%.
student loan eligibility rate = 100% – family contribution rate
student loan eligibility rate = 100% – 35%
student loan eligibility rate = 65%
Step 2: Convert Carlota’s student loan eligibility rate to a decimal by moving the
decimal two places to the left.
65% → 0.65
Step 3: Determine the portion of the total tuition and fees that Carlota’s family
does not have to pay. Multiply Carlota’s student loan eligibility rate by the total
amount of tuition and fees.
student loan eligibility = total tuition and fees × student loan eligibility rate
student loan eligibility = $2,780 × 0.65
student loan eligibility = $1,807
fyi
Student loans can be
complicated and should
only be considered as
part of an overall strategy
to pay for college. The
fi nancial aid offi ce at the
college of your choice is
the place to go to learn
more.