What if parents and students don’t have enough financial
aid to cover all of the expenses?
The purpose of financial aid is to assist students and their families in
funding their education. Although the Financial Aid Office will make every
attempt to meet your financial need, you may not have enough to cover all
of your educational expenses. In this case, a few alternatives exist that
may help in your financial dilemma.
Scholarships
Many scholarships exist that can
help pay a portion of your expenses. Most scholarships are based upon academic
merit, but there are many others available as well. Take some time to search
the internet and other sources for scholarship information. Please note that
you should NEVER pay for a scholarship search. There are hundreds of free
search tools to help you.
Parent PLUS Loans
The PLUS loan is 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
that your parent can request equals the cost of education minus other aid.
The interest rate, based upon 91-day T-Bill rates plus 3.1% will cap at 9%.
Checks or electronic fund transfers are co-payable to parent and school and
will first apply to the student's account balance. The remaining funds (if
any) are then sent directly to the parent. The Plus Loan does require a credit
check and some parents may not be eligible for 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. Please notify the Financial Aid Office
if this occurs.
Repayment begins 30 days after the first disbursement of a multiple disbursement,
but there are ways to defer payments while the student is in school. Like
the Stafford and Perkins Loans, the PLUS loan also has a PLUS Master Promissory
Note that must be completed. In addition, the parent must also complete the
PLUS Loan Application. A parent will receive a response to their loan application
within 10 working days.
Alternative Education 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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