Loans

Loans are borrowed funds, which must be repaid with interest after you are no longer a student. As college costs climb, many families find that supplemental borrowing by the student becomes an important resource for financing educational expenses.

Federal, Need-Based Loans
Some federal loans are awarded to students on the basis of need (Federal Perkins Loans, Federal Direct Subsidized Loans). Need-based loans allow students to defer paying interest on these loans while they are enrolled at least half-time.

Federal, Non-Need-Based Loans
Other federal loans are non-need based (Federal Direct Unsubsidized Loans). Students borrowing from non-need based loan programs may defer interest on these loans while they are enrolled in school. Non-need-based programs would be of interest to students who have little or no eligibility for need-based financial aid programs, need assistance in meeting the Expected Family Contribution (EFC), are classified as non-Michigan residents for tuition purposes and need to "fill the gap" between need-based financial aid and college costs, or have unusual costs above the standard student expense budgets.

Private, Non-Need-Based Loans
A number of private, non-need-based programs are available to students. In most cases, however, the interest rates available through federal programs are lower than the rates for private loan programs.

No matter which loan program you choose, remember to borrow only what you absolutely need—what you borrow today you will need to pay back after you graduate or withdraw (with interest). You may not need to borrow as much, if at all, if you are able to cut costs (personal, miscellaneous) or work. Many students wisely maintain a lower-cost lifestyle in order to borrow the least amount necessary.

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Printed from http://www.sph.umich.edu/students/funding/loans.html on July 20, 2008