Frequently Asked Questions about Student Loans

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1 Frequently Asked Questions about Student Loans What are private student loans? Private student loans are meant to help students fill the funding gaps that federal aid can leave behind. Private loans should only be used when all other federal aid and low-cost sources of funding have been exhausted. Student loans are held in the name of the student and, unlike Stafford loans, they often require a co-signer. They are issued by private lenders and are not guaranteed or subsidized by the government. Instead, the interest rate is based on the student s credit and/or the credit of any co-signers they have on the loan. Bridgewater Credit Union is pleased to partner with Credit Union Student Choice in offering a private student loan product. What are the steps I should take when requesting financial aid? 1. Fill out the FAFSA online at Please note that even though the FAFSA form is not part of the Credit Union Student Choice Loan application process it is required for the school certification process of the loan. Please consult your school s financial aid office if you need further assistance when completing the FAFSA. 2. Find out what scholarships you may be eligible for (check with your financial aid office for scholarship listings) and then apply for as many as you can. Free money is always best so make sure you fully research scholarships and grants you may be surprised at how many scholarships are available! While many will not pay for your entire tuition, every little bit you do not have to borrow helps. 3. Take the maximum amount of Federal Stafford Loans before applying for alternative loans. These loans are the most student-friendly. The government caps the interest rates and pays the interest for students on subsidized loans while in 4. Choose a lender carefully if an alternative or private student loan is required. Ask questions and look at interest rates, origination costs and terms carefully. This is a long-term relationship and this loan will need to be repaid once you graduate or withdraw from Bridgewater Credit Union is proud to partner with Credit Union Student Choice in offering certified private student loans. What type of loan is offered by Credit Union Student Choice? A certified private student loan from Student Choice is a line of credit for undergraduate education. Providing incredible convenience, a line of credit allows you to apply just once and then make multiple draws over the course of your undergraduate college career. An annual credit review will be performed in order to authorize future draw requests. What exactly is the certification process and how does it affect me? All requested draw amounts are certified by your During the certification process, your school will: Verify your enrollment Ensure that the amount you have requested meets your financial need based on the school s cost of attendance and the other financial aid you have received.

2 Indicate when the loan funds should be dispersed. After the loan has been certified, the funds will be dispersed directly to your If funding is sent by check, the check will be made co-payable to the school and student, and the student will be contacted by the school (normally through their school address) to endorse the check for deposit into their student account. If funding is sent electronically, the deposit will be handled directly by the For any excess funds that may remain after your direct school-related costs are paid, the school will issue a refund to you so that you may buy books or pay for other education expenses (such as off-campus room & board). What expenses are covered by this loan? Like a federal student loan, a Student Choice private loan is meant to cover costs included in your school s Cost of Attendance estimate. Typically, these may include tuition, fees, books, room and board, and other related expenses. How do I determine the amount of my private student loan? The amount of your private loan should be based on the cost of attendance minus the other financial aid (federal loans, scholarships, grants, etc.) you have already received. What are the loan limit amounts? The minimum loan amount is $1,000. The maximum loan amount (throughout your college career) is $75,000. Is a co-signer required for a Student Choice private loan? Yes. A co-signer is currently required in all cases. What if the student has not reached age 18? Bridgewater Credit Union will not accept a loan from a student who is under the age of 18. What schools are eligible for this loan? You are eligible for a Student Choice loan if you are attending almost any four-year public or private non-profit school that offers a degree-granting program (Title IV). For a complete list of participating schools (nearly 2,000), visit Bridgewater Credit Union s Student Choice website. Do you offer loan consolidation from other lenders? We do not offer loan consolidation at this time. What schools are NOT eligible for this loan? If you are attending a community college or a for-profit school, you are not eligible for this loan.

3 What other requirements are needed to apply? Students must be enrolled at least half-time in a degree or certificate program. International students can apply, but the co-signer must be a U.S. citizen or permanent resident who has resided in the U.S. for the previous two years. Do I need to be a member of Bridgewater Credit Union to be eligible for a Student Choice Loan? Yes, in order to fund the loan, you (the student) will need to be a member of the credit union. If you are not already a member, visit a Bridgewater Credit Union branch or our website to open your membership and account while we are processing your loan so funding can be completed as quickly as possible. What is the interest rate on the loan and how is it determined? Prime Rate + 3% - Maximum Rate: 18% - Floor Rate: 6% Is there any way to reduce the interest rate? Yes! By choosing automated payment during your repayment period, you will receive a 0.25% discount on your interest rate. Is there a loan origination fee? No! Unlike almost all other private student loans, which often feature originations fees of 4% to 6%, a Student Choice loan has no origination fee, saving you hundreds of dollars. Are there any fees? The only fees associated with a Student Choice loan are a non-sufficient fund fee on returned checks and a late payment fee. How do I apply for a Student Choice private loan? You can apply 24/7 at Bridgewater Credit Union s website or by calling our toll free number (866) Instant approval is possible! When is the earliest I can apply for a Student Choice private loan? May for the school year. What happens after I have been approved? After you have been approved for a loan, you must download an application kit or request that it be mailed to you. Upon receipt of this kit, you will need to review the materials and then return all required documentation via mail or fax. The submitted documents will be reviewed for accuracy. If there are any issues, you will be contacted by our loan processing department. Once the documents have been approved, the loan request will be sent to the school for certification. Upon certification, the funds will be disbursed as directed by the How quickly can I get the funds?

4 With our online application, downloadable credit agreement and fax-back or e-signature option, we could have the funds ready in as little as seven business days after your conditional approval. However, the exact timeline for disbursing funds will be set by your school in coordination with Student Choice. What are the repayment terms of the loan? While you are in school, you have several options: Full deferment of principal and interest* Interest-only monthly payments Principal and interest monthly payments *During deferment, interest on the loan will accrue. Mandatory repayment begins six months after the student graduates or separates from the Please note that for loans in full deferment during college, unpaid interest will be capitalized at the end of the 6- month grace period and added to the original principal balance. Monthly payment is based on final loan balance and repayment choices. As repayment begins, you will have two options: Straight repayment over 20 or 25 years. If the loan balance is under $40,000 the loan repayment period is 20 years. If the loan balance is above $40,000 the loan repayment period is 25 years. OR Graduated repayment for two years. The graduated repayment option temporarily lowers monthly payments by amortizing the first two repayment years over a 40 year period and then over either 18 or 23 years for the remainder of the loan, depending on the loan balance as described above. Is there a pre-payment penalty? No. You can pay off your Credit Union Student Choice Loan at any time, even if you are still in Can the co-signer ever be released from the loan? Yes. Certain conditions apply. Why are Credit Union Student Choice Private Loans better than those from other lenders? Unlike for-profit lenders, Bridgewater Credit Union exists only to serve the best interests of its members. This allows us to offer lower loan rates and fees than other, more traditional private lenders. The most important differences for you are: zero origination fees, more flexible repayment terms and lower overall loan rates. In addition, co-signers may be released from the loan after 48 months of on-time payments. The bottom line is that Credit Union Student Choice Loans were created with one goal in mind helping you finance a higher education without a higher price tag.

5 What are federal student loans? A federal student loan allows students and their parents to borrow money to help pay for college through loan programs supported by the federal government. They usually have low interest rates because they are capped by the government. The most common type of federal student loans are Stafford and PLUS loans. Subsidized Stafford Loans provide low interest rates and are available to students who demonstrate financial need based on income and other information provided on the Free Application for Federal Student Aid (FAFSA). A credit check is not required to receive these loans. The federal government pays the interest on these loans until six months after the student is no longer enrolled in school at least half time. Unsubsidized Stafford Loans provide low interest rates and are available to all students regardless of financial need (although the FAFSA still must be filed). A credit check is not required to receive these loans. The student is responsible for the interest, which may be paid while the student is in school or accrued and then added to the principal balance when the student enters repayment, which occurs six months after the student is no longer enrolled in school at least half time. PLUS Loans can be obtained by parents to help pay the cost of education for their children. PLUS loans require a credit check and, in some instances, an eligible cosigner. Repayment of PLUS loans begins following the final disbursement for the year.