Loan Guide

Transcription

1 Loan Guide This guide is designed to help you make the most informed decision on borrowing for your education at Berklee College of Music. There are many choices for students and parents to consider before making the decision to borrow. We have organized this guide to help our students and families weigh the options and it includes information on how to choose a lender, apply for a loan, and make the most informed decision regarding repayment of your loan. The college is in no way affiliated nor do we accept any benefits from any lenders. Berklee College of Music will process a loan from any lender, and it is your right to apply for loans through the lender of your choice. If you have questions about the loan process or any of the information contained in this guide, please do not hesitate to contact us. We re here to help! Office of Financial Aid, Berklee College of Music STAY IN THE KNOW! Like us on Facebook and receive up Boylston Street MS FA Boston, MA to- date information on upcoming events and clinics, Phone: BERKLEE ( ) - Option 1 Fax: financialaid@berklee.edu Web: www. Berklee.edu/financial- aid registration deadlines, important academic and college policy changes and other frequently asked questions in your News Feed. Become a fan of the Berklee Enrollment page on Facebook today!

2 Questions to consider before borrowing an alternative loan Have I exhausted all federal aid options? Private student loans should always be a last resort when seeking Is borrowing a loan really necessary? Borrowing one large loan may seem like the most educational funding. We strongly encourage all eligible students to file the convenient route at first, but there are m any other FAFSA (Free Application for Federal Student Aid). Berklee financing options that can help reduce the amount uses this application to award federal, state and institutional need based. a student actually may have to borrow. A small payment plan each semester could potentially save a student thousands in interest over the Do I have a creditworthy co- signer? lifetime of a private loan. Berklee offers a m onthly Berklee recommends that students planning to borrow private loans, apply payment with a credit worthy cosigner as you will generally receive more favorable Systems (TMS). This option allows you to divide loan terms. It is very difficult for a student to be approved on his/her own, your payment into monthly installments. There so having a credit worthy cosigner is almost a necessity. are no qualifications to use this service. You do not plan through Tuition Management incur interest while paying off your fees, and there is no credit approval necessary. Berklee will give Do I know the total cost of the loan? Many factors will determine how much a loan will actually cost such as interest rate, years of repayment, loan fees, etc. Make sure you thoroughly you advance credit for the total amount to be paid, provided you remain current with your monthly payments. read through the terms of a loan before signing the final disclosure. What are common repayment options? There are three common repayment options: deferred, interest only and immediate repayment. Keep in mind that every lender s repayment options m ay vary Deferred Repayment make no payments while enrolled in school. Interest will accumulate and be added to the total principle of your loan. This is generally the most expensive repayment plan. Interest Only Repayment make interest payments but defer payments on the principle amount while enrolled in school. This helps keep your overall loan balance close to the original amount borrowed. 2 Immediate Repayment pay both principle and interest of the loan while enrolled in school. This is the generally the most cost effective option.

3 of attendance Cost Cost of attendance What is cost of attendance? Cost of attendance (COA) is the total, average amount of money it will reasonably cost a student to attend Berklee full time for one academic year (Summer, Fall, and Spring, or any combination thereof). A student s COA is made up of direct and indirect charges. Direct charges are Berklee charges on your student account, such as tuition and fees. Indirect costs are average allowances for other education- related expenses that do not appear on your Berklee bill, such as off- campus housing, books and supplies, travel, and other personal expenses. A student s COA represents the maximum amounts of resources (including scholarships, financial aid, and private loans) that a student may receive for that academic year. Your actual cost will vary depending on choices of dining and housing options, travel expenses, other out- of- pocket expenses, etc. So what does this all mean and what is my cost of attendance? The chart below shows a breakdown of each semester and associated charges. Pick and choose the semesters that relate to you and add them together to find your cost of attendance then use the formula below to determine how much you re eligible to borrow based on your cost of attendance. Borrow only what you need. Cost of attendance financial aid/scholarship = remaining loan eligibility Semester Summer 2013 Fall 2014 Spring 2014 Charge Diploma Direct Costs Tuition Room & Board on Campus Comprehensive Fee Health Insurance1 Laptop2 Degree $15,650 $7,310 $536 $1,960 $3,172 $13,474 $7,310 $536 $1,960 $3,172 Indirect Costs Room & Board off Campus Average loan fees Transportation Personal Books & Supplies $7,310 $28 $484 $1,125 $237 Total ~$26,657 Direct Costs Tuition Room & Board on Campus Comprehensive Fee Health Insurance1 Laptop2 Total $18,257 $8,600 $536 $1,960 $3,172 ~$24,549 $15,742 $8,600 $536 $1,960 $3,172 Indirect Costs $8,600 $28 $484 $1,125 $237 Direct Costs Tuition Room & Board on Campus Comprehensive Fee Health Insurance1 Laptop2 Total ~$31,852 $18,257 $8,600 $536 $1,960 $3,172 ~$31,242 ~$29,409 $15,742 $8,600 $536 $1,960 $3,172 Room & Board off Campus Average loan fees Transportation Personal Books & Supplies Indirect Costs Room & Board off Campus Average loan fees Transportation Personal Books & Supplies ~$28,799 $8,600 $28 $484 $1,125 $237 1 Can be waived if student is covered under another comparable health insurance plan. Health insurance can be waived online a t my.berklee.net. Charges in t able are e stimates for A one- time charge billed t o e ntering students only. F igure includes 6.25% M assachusetts sales tax. Charges in t able are e stimates for

4 Federal Loan Options Federal Loan Options Federal Student Loans Direct Stafford Loans, from the William D. Ford Federal Direct Loan (Direct Loan) Program, are non credit based, low- interest loans for eligible students to help cover the cost of higher education. There are two types: Subsidized Stafford Loans - Direct Subsidized Loans are for students with financial need. Your school will review the results of your Free Application for Federal Student Aid (FAFSA) and determine the amount you can borrow. You are not charged interest while you re in school at least half- time and during grace periods and deferment periods. Interest Rate Fees Standard Repayment How to Apply 3.4 % fixed 1% 10 years File FAFSA online at Unsubsidized Stafford Loans - You are not required to demonstrate financial need to receive a Direct Unsubsidized Loan. Like subsidized loans, your school will determine the amount you can borrow. Interest accumulates on an unsubsidized loan from the time it s first paid out. You can choose to pay the interest while you are in school or you can allow it to accumulate and the interest will be capitalized once you enter repayment. Interest Rate Fees Standard Repayment How to Apply 6.8% fixed 1% 10 years File FAFSA online at There are limits on the maximum amount you are eligible to receive each academic year (annual loan limit). The actual amount you can borrow each year depends on your year in school, w hether you are a dependent or independent student, and other factors, and may be less than the maximum amounts shown in the loan limit chart. Berklee will determine what types of loans and how much you m ay borrow. Completed credits Diploma Completed credits Degree Grade Level Dependent Students Annual Loan Independent Students Annual Loan Freshman $5,500 (up to $3,500 subsidized) $9,500 (up to $3,500 subsidized) Sophmore $6,500 (up to $4,500 subsidized) $10,500 (up to $4,500 subsidized) Junior $7,500 (up to $5,500 subsidized) $12,500 (up to $5,500 subsidized) Senior $7,500 (up to $5,500 subsidized) $12,500 (up to $5,500 subsidized) Federal Parent Loans Parents of dependent students can take out loans to supplement child's education expenses as long as certain eligibility requirements are met. The federal Parent Loan for Undergraduate Students (PLUS) is a credit based loan that lets parents borrow money to cover any costs not already covered by the student's financial aid package, up to the full cost of attendance. There is no cumulative limit. Parents have the option of deferring repayment on Parent PLUS loans while the undergraduate student on whose behalf they borrowed the PLUS loan is in- school and for a six- month grace period after the student graduates or drops below full- time enrollment. 4 Interest Rate Fees Standard Repayment How to Apply 7.9% fixed 4% 10 years Apply online at

5 Alternative Loan Options Alternative Loan Options Alternative loans help bridge the gap between the actual cost of your education and the other financial resources you have. Alternative loans are offered by private lenders (banks/credit unions) and are credit based with variable interest rates. Berklee College of Music will process a loan from any lender, and it is your right to apply for loans through the lender of your choice without penalty. The college is in no way affiliated nor do we accept any benefits from any lenders. We recommend these lenders on our ELM Select website based on students and or their family choices and who borrowed in the previous two years. To view our loan list please visit: Alternative Fixed Interest Rate Loans A fixed interest rate loan is a loan where the interest rate doesn't fluctuate during deferment or repayment. This allows the borrower to accurately predict their future payments. Alternative Variable Interest Rate Loans A variable interest loan is a loan where the interest rate moves up and down based on the changes of an underlying interest rate index. Berklee highly recommends borrowers apply with a credit worthy cosigner. Be sure to research each loan product for possible borrower benefits. The loans and rates listed below assume a creditworthy cosigner. Rates may vary if the borrower applies without a cosigner. What is the difference between LIBOR and Prime? Variable interest rates are typically based on an underlying interest index such as LIBOR or Prime. Generally, lenders will add a margin on top of the offered LIBOR or Prime. You may see interest rates such as LIBOR 0.50% or Prime 0.25%. LIBOR (London Interbank Offered Rate) is the average interest rate in which banks lend money to each other. Prime is the best lending rate banks charge their most creditworthy customers. What are the borrower benefits? Lenders offer many different borrower benefits that may help reduce the overall cost of your loan. Common benefits can include, but are not limited to: Auto- debit payments borrowers who set up automatic payments can receive an interest rate reduction (usually around 0.25%). The interest rate reduction will not lower the monthly payment amount, but will reduce the interest that accrues, thereby Graduation Incentive the lender may offer a principle or interest reduction if you complete your degree and provide proof of graduation within a specified timeframe. Co- Signer Release Option - cosigners can be released from the loan after you've made a specified amount (as determined by the lender) of on time payments. 5

6 Loan Process & FAQ Loan Process & FAQ I ve chosen a loan, now what? Once a lender has been chosen, it s time to apply. The vast majority of alternative loans can be applied for online at the lender s website. Once you click Apply you can expect at least, but not limited to, the following steps. Loan Application Disclosure The lender will provide an overview of the loan product, potential interest rates, associated fees, repayment examples, etc. Loan Approval Disclosure After you ve completed the initial loan application and have been pre- approved, your lender will provide the loan approval disclosure. This provides details on the actual interest rate and loan specifics you were approved for. You will have a 30- day acceptance period, during which the private loan terms may not be changed. Self- Certification Form Your lender will provide the Private Education Loan Applicant Self- Certification form on their website or request a paper copy to be submitted. This form is submitted to the lender, not to the college and asks for the student s cost of attendance (see page 3) and estimated financial aid for the period of enrollment covered by the loan. School Certification Once you have accepted the Loan Approval Disclosure and completed the Self- Certification Form, your lender will send an electronic request to Berklee. We will review the timeframe and amount requested to be sure it fits within your cost of attendance and may reach out to you via to confirm information about your loan. Final Loan Disclosure Once Berklee has completed School Certification; your lender will provide the Final Loan Disclosure. The final terms and conditions of the loan must be accepted before your lender will notify Berklee of a fully processed loan. Upon acceptance, your lender will schedule a disbursement date (generally the first day of classes). Once your loan is scheduled for disbursement, it will be applied to your account in a Verified ( V ) status, meaning it will be considered subtracted from any balance due. I m being asked for the loan period or period of enrollment, what does that mean? The loan period or period of enrollment is the semester(s) for which you wish to use a loan. Generally, a loan period is the first day of class through the last day of class in a given semester. If you are applying for a multiple semester loan, you will want to use the first day of semester through the last day of the second or third semester (see chart below). Summer 2013 Only Loan Summer 2013/Fall 2014 Loan Summer 2013/Fall 2014/Spring 2014 Loan Fall 2013/Spring 2014 Loan 05/21/ /16/ /21/ /20/ /21/ /09/ /09/ /09/2014 I am living off campus and need money from my loan to help pay for living expenses. When will I receive my loan money? If your financial aid/scholarship/alternative loan is in excess if your Berklee bill, the difference will be refunded to you in the form of a paper check or direct deposit (students must sign up for direct deposit online at my.berklee.net). This refund can be used for any living expenses you may have. Please note: The earliest possible time you can receive a refund will be the third Friday into the semester (after the add/drop period has ended). This means that you should be able to cover any off campus living expenses out of pocket for at least the first month of each semester. No exceptions will be made. 6