M YOU Work in your congo'shnancial aid once and Mary Lou Hennings, a junior, has come to you to advice. Sne just sound out that her father has been ownstre from his job. To ensure that she has sufficient funding for her senior year, she needs to apply for a loan to help with expenses She has a part time job with the home C pay of $450 per month. She expects her annual not earnings to be approximately $34,000 after graduation, and she plans to continue living at home for another year or two. Her parents have told her she can use up to $10,000 of their home equity line of credit however she is not sure she wants to do that she does not have any debt, except for 4 more years of monthly auto payments of $136She is worried about trying to pay for an additional loan while still in school, although her dad is NI convinced he will find another job soon and be able to make up the payments a. Explain the difference between a Direct Subsidized Loan and a Direct Unsubsidized Loan to Mary Lou AS a. Explain the difference between a Direct Subsidized Loan and a Direct Unsubsidized Loan to Mary Lou (Select all the choices that apply) St DA A major difference between Direct Subsidized and Direct Unsubsidized loans is that subsidered loans do not accrue interest while the student is in school of during the grace period EB. A major difference between Direct Subsidized and Direct Unsubsided loans is that subsidized loans acere interest while the student is in school or during RE 2 P Cilick to select your answer(s) ce Delween a Direct Subsidized Loan and a Direct Unsubsidized Loan to Mary Lou A b. What types of student loans are available to Mary Lou? (Select the best answer below) St O A. Mary Lou can apply for either the Direct PLUS Loans for Parents or the Stafford Loan W B. Mary Lou cannot apply any loans because student loans are only for incoming freshmen, and she is a jun RE Marv Turan annlv for either the Federal Direct loan or the Direct PLUS Ioans for Parents Pa Click to select your answer(s). A: Direct Subsidized Loan and a Direct Unsubsidized loan to Mary Lou What lending limits apply? (Select the best answer from the drop down menus) St The y has an annual limit for undergraduate students of $5,500 per year The has anuals of $3,500 for the first year, $4,500 for the second year, and $5,500 for the third and fourth years. The has a limit up to $2,000 for undergraduate students. The limit is the cost of attendance minus any other financial and the student receive RA Pe Click to select your answer(s) SE c. Assume her student loan will have an interest rate of 6 percent and her parents home equity line has a rate of 9 porcent. If both loans have a 10-year matunity what will her monthly payment be on $4.000 ignonng any possible deferments? Mary Lou's monthly payment on the student loan would be s Round to the nearest cont Mary Lou's monthly payment on the home equity loan would be (Round to the nearest cent R PClick to select your answer(s) Sidoa loan and a Direct Unsubsidized loan to Mary Lou A. d. Explain the tax consequences of the two options assuming Mary Lou is in the 25 percent marginal federal tax bracket and her parents are in the 28 percent tax bracket No state income tax is assessed SE Explain the tax consequences of the two options (Select the best choice below) RE O A. Mary Lou's parents qualify for a tax deduction on the home equity loan interest within its) or for a tax savings on the student loan interest paid up to a Pe Click to select your answer(s). ? 105 St between a Direct Subsidized Loan and a DirectUnsubsidized loan to Mary Lou The after-tax interest rate for the home equity loan is % (Round to two decimal places) The after-tax interest rate for the student loan is % (Round to two decimal places) e. Using her current income, calculate her debt limitatio for the most expensive school loan and her to loon during the school you. Using her projected income calculate her debt limit ratio for the loans after graduation RC Click to select your answer(s) awon nor dad is ne between a Direct Subsidized Loan and a Direct Unsubsidized Loan to Mary Lou Mary Lou's debt limit ratio for the most expensive school fan and her auto loan during the school year is (Round to two decimal places) Mary Lou's debt limit ratio for the most expensive school loan and her autofon after graduation (Round to two decimal places) 1. If Mary Lou suffers financially and has to file for bankruptcy, will her student loan debt be forgiven? 50 . Click to select your answer(s). CO A SE f. If Mary Lou suffers financially and has to file for bankruptcy, will her student loan debt be forgiven? A. Student loan debt is the only debt that cannot be forgiveti in bankruptcy B. Student loan debt is one of the few debts that cannot be forgiven in bankruptcy c. This is why it is so important for Mary Lou to make her payments on time and take on new debt in order to pay her student loan deb R Pe Click to select your answer(s) AS St Loan to Mary Lou 9. Considering all available information, which loan would you suggest to Mary Lou? Why? (Select the best choice below) O A Assuming Mary Lou does not anticipate dramatic increases in her salary to more than 360 do that would significantly limit the amount of the student toon interest adjustment the student loan is the cheaper alternative. The student loan also will contribute to her FICO Score and will offer deferral options B. Assuming Mary Lou does not anticipate dramatic increases in her salary to more than 500,000 that would significantly limit the amount of taxes her parents RA p. Click to select your answer(s) As 260 Loan and a Direct Unsubsidized Loan to Mary Lou Are there other options for financing her education? (Select the best choice below) St O A Another possible financing option is that her parents can apply for other the Federal Director Stafford Loan With these loans, the available amount of financing depends on the total budgeted cost of education minus any other financial aid tocarved, so the total amount available may be more than Mary Lou can receive through the Federal Director Stafford Loon programs, if she applied herself RO Click to select your answer(s)