You work in your college's financial aid office, and Mary Lou Hennings, a junior, has come to you for advice. She just found out that her father has been "downsized" 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 take-home pay of $350 per month. She expects her annual net earnings to be approximately $31,000 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 more years of monthly auto payments of $192. She is worried about trying to pay for an additional loan while still in school, although her dad is convinced he will find another job soon and be able to make up the payments.

Explain the difference between a Direct Subsidized Loan and a Direct Unsubsidized Loan to Mary Lou.(Select all the choices that apply.)

A. A major difference between Direct Subsidized and Direct Unsubsidized loans is that subsidized loans do not accrue interest while the student is in school or during the grace period.

B. A major difference between Direct Subsidized and Direct Unsubsidized loans is that subsidized loans accrue interest while the student is in school or during the grace period.

C. Unsubsidized loans accrue interest from the day they are awarded, and students can either pay the interest as they go or let it accrue until the end of their grace period. Students must demonstrate financial need for unsubsidized loans but not for subsidized loans.

D. Unsubsidized loans accrue interest from the day they are awarded, and students can either pay the interest as they go or let it accrue until the end of their grace period. Students must demonstrate financial need for subsidized loans but not for unsubsidized loans.

What types of student loans are available to Mary Lou?(Select the best answer below.)

A. Mary Lou can apply for either the Direct PLUS Loans for Parents or the Stafford Loan.

B. Mary Lou cannot apply any loans because student loans are only for incoming freshmen, and she is a junior.

C. Mary Lou can apply for either the Federal Direct Loan or the Direct PLUS Loans for Parents.

D. Mary Lou can apply for either the Federal Direct Loan or the Stafford Loan.

Fill in the blanks in parentheses:

The (Federal Perkins Loan Program, Stafford Loan, Direct Plus Loan for Parents, or Unsubsidized Loan) has an annual limit for undergraduate students of $5,500 per year. The (Federal Perkins Loan Program, Direct Subsidized (Stafford Loan), Direct Unsubsidized (Stafford Loan), Direct Plus Loan for Parents) has anual limts of: $3,500 for the first year, $4,500 for the second year, and $5,500 for the third and fourth years. The (Federal Perkins Loan Program, Direct Unsubsidized (Stafford Loan), Direct Subsidized (Stafford Loan), Direct Plus Loan for Parents) has a limit up to $2,000 for undergraduate students. The (Federal Perkins Loan Program Direct, Unsubsidized (Stafford Loan), Direct Plus Loan for Parents, Direct Subsidied (Stafford Loan)) limit is the cost of attendance minus any other financial aid the student receives.