Educator Toolbox

TXGU Activity: Diving into Financial Aid

Diving_into_Financial_Aid.jpg

Created By:
 Texas GEAR UP

Grade Level: 11th

Introduction for Educators: Your students have worked hard to prepare for college, but they also need to prepare for life after college.

Many of your TXGU’ers will have to take out some loans. If they don't repay them on time, interest will accrue. If they don't begin to pay their bills soon, costs can spin out of control.

Teach your students that they should pay back their loans, and pay them back fast.

Introduction for Students: Have you ever woken up with a small headache and thought to yourself, “I’ll wait for it to go away”—but it just doesn’t go away? By the end of the day, you have a splitting headache. If you’d taken care of it earlier, it would’ve been much easier to manage.

Every month you don’t pay a loan, it becomes even larger. You need to pay your loans back, and pay them back fast.

The Activity: Have students will calculate the cost of different loans so they can begin to choose which is right for them. They’ll do this with research and imagination.

Step 1) Have students figure out the current interest rates for four types of loans:

  • Federal Loan
  • Private Loan
  • Subsidized Loan
  • Unsubsidized Loan

Step 2) Have students imagine they take out a $1,000 loan of each type.

Step 3) Have students access the calculator tools at https://bigfuture.collegeboard.org/pay-for-college/tools-calculators or http://www.finaid.org/calculators/loanpayments.phtml.

Step 4) Have students use the tools to calculate how much it will cost to pay for a $1,000 loan over the course of 10 years.

Ask students which loan is the most affordable.

Bonus Features: April 15 is Tax Day. But don’t worry—if students play their cards right, their loans will help them to pay less taxes! Have your students read the description of Student Loan Interest Deduction at http://www.irs.gov/taxtopics/tc456.html. If they have trouble understanding what it means, help explain it to them.