Student loans have become an essential component students use to finance their educational expenses. Loans,
by definition and regulation, must be repaid and therefore should be used sparingly and wisely. If you accept
a loan you are responsible for repaying the loan plus interest. Remember that the more you borrow the higher
the monthly repayment will be, so only take as much loan money as you will need.
Each loan program has specific eligibility criteria, repayment, cancellation, and deferment conditions. The
following descriptions are intended to provide enough general information for students and parents to make
informed decisions about taking out a student loan. Additional information can be found at www.studentaid.ed.gov under "Federal Student Aid Programs."
Stafford Loans (Subsidized and Unsubsidized)
The Stafford Loan Program is a federally sponsored and regulated national student loan program for
undergraduate and graduate students. This loan is awarded by the University, guaranteed by an approved
Guarantor and funded by private banks and credit unions.
Eligibility for the Subsidized Stafford Loan is based on financial need as determined by the federal
processor and the FAO. This loan has a fixed interest rate of 5.6%.
No payments are due and no interest accrues on the loan until 6 months after you leave school or drop below
half time enrollment.
Students without financial need may be eligible for an Unsubsidized Stafford Loan. The interest on the Unsubsidized Stafford Loan begins immediately and accrues at 6.8%. Students can pay the interest quarterly or allow the interest to add to the principal.
The year maximums for the Stafford loan program are below. The loan will be subsidized or unsubsidized based on financial need.
|
Dependent |
Independent |
Freshman |
$5,500 (up to $3500 Subsidized) |
$9,500 (up to $3,500 Subsidized) |
Sophomore |
$6,500 (up to $4500 Subsidized) |
$10,500 (up to $4,500 Subsidized) |
Junior |
$7,500 (up to $5500 Subsidized) |
$12,500 (up to $5,500 Subsidized) |
Senior |
$7,500 (up to $5500 Subsidized) |
$12,500 (up to $5,500 Subsidized) |
Graduate |
|
$18,500 (up to $8,500 Subsidized) |
Over their academic careers, dependent undergraduate students may borrow a maximum of $31,500 in the Stafford Loan Program, with no more than $23,000 in Subsidized Stafford Loan. Independent undergraduate students may borrow up to $57,500 in Stafford loans, with no more than $23,000 in Subsidized Stafford Loan. Graduate students may borrow $138,500 in total Stafford loans up to $65,500 in Subsidized Stafford loan.
The Stafford Loan also has a maximum repayment period of 10 years. When a loan is processed, up to a 2% processing fee may be deducted from the gross amount of the loan before disbursement. (Borrowers repay the gross amount). To calculate your monthly repayment, use the following link: www.finaid.com/calculators/loanpayments.phtml.
First time borrowers of the Stafford Loan are required to complete an Entrance Interview and Maser
Promissory Note. Students normally only have to complete the Entrance
Counseling and Master
Promissory Note once in their
academic career.
Parent PLUS Loans
The PLUS loan is also a federally sponsored and regulated national
student loan program. Parents of dependent students can take out
loans to supplement their children's aid packages, so the loan is
actually the parent's loan and not the student's. The maximum annual
limit is the cost of education minus other aid. The interest rate is
fixed at 8.5%.
Checks or electronic fund transfers are co-payable to parent and
school and are dual disbursed. The Plus Loan does require a credit
check and some parents may not be eligible the loan. If a parent is
turned down for a PLUS loan and receives a Letter of Denial the
student may be eligible for additional Stafford Loan.
Repayment begins 60 days after the final disbursement of a multiple
disbursement. Like the Stafford and Perkins Loans, the PLUS loan
also has a Master Promissory that must be completed. In addition,
the parent must also complete the
PLUS Loan Application and the
PLUS Master Promissory Note.
Federal Perkins Loan
A low-interest (5 percent) loan for both undergraduate and graduate students with exceptional financial need.
Your school is your lender. The loan is made with government funds with a share contributed by the school.
You must repay this loan to your school.
Eligibility for the Perkins Loan is based on financial need (as determined by the federal processor and the
FAO) as well as the availability of funds. Perkins loan awards are made to students using need and timing of
application as criteria.
This loan has a fixed interest rate of 5% and a maximum of 10 years to repay. No payments are due and no
interest accrues on the loan until 9 months after you leave school or drop below half time status. Cumulative
borrowing limits are $20,000 for an undergraduate degree and $40,000 for a graduate degree. To calculate your
monthly repayment use the following link: www.finaid.com/calculators/loanpayments.phtml.
Deferment and cancellation provisions are contained on the Master Promissory Note, which you must complete
prior to receiving the loan for the first time. An Entrance Interview must also be completed prior to
receiving the loan, and an Exit Interview is required upon leaving the University.
First time borrowers must complete a Perkins
Entrance Interview and Master Promissory Note.
Consolidation Loans
Combines several student or parent loans into one bigger loan from a single lender, which is then used to pay
off the balances on the other loans.
Alternative Educational Loans
After the traditional loan options such as Perkins, Stafford and PLUS have been exhausted, students can look
into the Alternative Loan market. Unlike the Federal Loan Programs, alternative loans are not regulated by
the government. Each lender has its own set of application, credit, and co-signer requirements, and interest rates are variable, not fixed. Generally, alternative student loan payments are deferred while the student is in school (with the interest on the loan accruing). Students should inquire whether this is an option for their loan and for how long the loan will be deferred.
In choosing a lender, it’s always a good idea to start with the lender who provides your Stafford Loan to find out if they also do alternative loans. By doing so, you will be dealing with only one company for all of your loans, and your lender may be able to offer you options like combined billing or auto debit for all of your loan payments. If your Stafford lender does not offer private loans, it is recommended that you explore companies you have worked with in the past or have accounts through. Be cautious of lenders whose names you do not recognize or those who offer you ‘teaser’ or introductory rates or prize incentives. Below are some questions you should ask when considering an alternative loan lender.
- What is my interest rate? Lenders will advertise ‘as low as’ rates but it’s important to know what your rate will be.
- What fees am I being charged (reducing my proceeds)?
- How often do you capitalize interest on the loan? Lenders who capitalize interest less frequently will save you more money over time.
- Is there a prepayment penalty?
- Can I defer payments while I am in school or if I have financial difficulty?
- What benefits or rate discounts are offered, and what conditions do I have to meet to obtain the benefits?
- Is it important to me that my lender have local presence?
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