Frequently Asked US Loan Questions

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1 Frequently Asked US Loan Questions This document has been prepared to help you understand the US loan application process and how loan money will be handled once disbursed. It is strongly recommended you read through each question so that you become familiar with the loan process from start to finish. You should have this document with you when reading through the US Loan Guide. Which loans can I borrow? There are three kinds of federal/government loans that US students attending the University of the Arts London can borrow: Federal Direct Stafford Federal Graduate PLUS Federal Parent PLUS There is one kind of private loan that students can borrow: Sallie Mae private Smart Option Loan You can read more about your eligibility to borrow these loans in our US Loan Guide and via the relevant lender websites. Perkins Loans are not available to US students studying outside the US. How much can I borrow? You can borrow loans to fund your full estimated cost of attendance which is the value produced when you add your tuition fees to the University s estimated living costs. Tuition fees are found on your offer letter or on your course s profile page on our website, The cost of living estimate we use for loan purposes is found in our Cost of Attendance document on the US loan web pages. Cost of living is determined by using figures based on British Council standards and quotes from other London universities so the values are deemed accurate, standard, and are intended to be fair to all students. US loans are not available to support a certain lifestyle. Will I actually be eligible to borrow loans? Generally, American students should be able to borrow loans to fund their full estimated cost of attendance for each year of study. The PLUS loans and Sallie Mae private loans are based on credit checks so as long as you and/or your parents have a good credit history or you can locate a credit-worthy co-signer/endorser, borrowing funds is possible. 1

2 What if I don t have good credit or a credit-worthy co-signer? If you don t have good credit or someone who can act as a co-signer for your loans, then it s unlikely that you ll be able to obtain the necessary loan funding for your studies. Additionally, to secure a student visa, you must show suitable funding is available. To avoid disappointment, start planning and analyzing available funding and the necessary costs to undertake your desired course before you apply to study. Can I get grants and actual financial aid from FAFSA instead of just loans? The financial aid package offered to students studying in the US changes when you choose to study overseas. You will not be eligible for aid funding that typically comes with FAFSA such as Pell Grants, Academic Competitiveness Grants or FSEOG if you choose to study outside the US. US students studying at the University of the Arts London can only look to borrow federal and/or private loans. Can I get Veteran s Affairs funding (GI Bill or AmeriCorps Funding)? If you, or a member of your family, are or were a veteran, you may be eligible for these forms of funding. While the University is registered with Veteran s Affairs and is listed as an approved institution, each course must be approved for funding on an individual basis. Course approvals can take several months so it is very important that you let us know as soon as possible so we can start the process of having your course approved before you begin your studies. You must apply and be accepted to study with the University before we undertake the process of getting your course approved. What s FAFSA? FAFSA is the Free Application for Federal Student Aid and you must complete a FAFSA in order to obtain government loans. FAFSA enables you to provide the US government with your financial details which we ll need when certifying your loans. Completing a FAFSA is only the first stage in the loan process it is NOT a loan application. What s a SAR? The Student Aid Report is a summary of the FAFSA. When you have completed your FAFSA and checked it for errors, you must us to let us know so that we can obtain your SAR electronically. What s an MPN? The MPN is the Master Promissory Note which is the contract between you and the US Government, outlining the terms and conditions of your loan. Stafford, Parent PLUS and Graduate PLUS loans all require MPNs. You must complete and submit your MPN via and then you can view it as a PDF. the PDF(s) to us after you have completed your MPN(s). You may be told that the MPN is automatically sent to your university but this only relates to US universities. 2

3 Is applying for loans similar to how it works in the US? No you are far more responsible for handling your own funding and must take a proactive approach throughout the process. There are also different rules in place between universities based in the US and those based overseas. Read the US Loan Guide and our loan web pages carefully for assistance regarding how to apply for loans when studying in the UK. How do I actually apply for loans? Please follow our 7 Steps to Apply located in our US Loan Guide to apply for federal loans. For private Sallie Mae loans, you simply visit this link to submit your application (and that of your co-signer) online: The school code you ve listed in the US Loan Guide seems to be for London College of Fashion only...are you sure that s correct? Yes! The University historically had 6 school codes for each of our 6 colleges but we have since merged them into one code which used to belong to LCF. The US Department of Education has not been able to make this change in their systems so when filling out your FAFSA, MPNs or Counselling, please use G34733 regardless if says London College of Fashion. When should I apply for loans? Loan applications generally begin in late May or early June and students will be ed to prompt the start of the loan application process when it is time to start applying. Completing the FAFSA is the first step which students should do after taxes have been filed (usually around the middle/end of April). Submitting the FAFSA before taxes are filed means that your SAR might have errors that you will need to correct later. Additionally, the MPNs are linked to credit checks that expire after 180 days so submitting your MPN too early, when we are not processing loan certifications, could result in you having to submit a second MPN later. Will I be able to borrow funding for my whole degree programme, even if it s 3 or 4 years long? Yes but you must apply for your loans each year. You will not be able to borrow the full cost of the degree all at once. Since financial information changes annually, you must complete a new FAFSA and apply for a new set of loans annually too. Can I still borrow loans if I m getting a scholarship? Yes but you are required to disclose any scholarships you will be receiving as we must include their value in your estimated cost of attendance. We are not allowed to over-certify our students. If, for example, your scholarship covers your full tuition 3

4 fees and living costs, then you will not be able to borrow (and logically will not require) loans. What is Entrance Counselling? Entrance Counselling is a method of ensuring you understand the terms and conditions of borrowing a loan and we are required to have evidence of your Counselling on file for audit purposes and before we can distribute federal funds to you. Entrance Counselling is only for federal loans, not private loans and only students must submit Entrance Counselling, not parents. Where do I complete Entrance Counselling? Conveniently, the same website where you submit your MPN(s): Please us when you have completed your Counselling as we are not informed automatically. Please ensure you use the University s federal school code, G34733, so that your Counselling is attached correctly and accessible to us. What is Exit Counselling? Exit Counselling is similar to Entrance Counselling and must also be completed through Exit Counselling assists the borrower to understand what happens to their loans after graduation and offers advice about re-payment. You are required to complete Exit Counselling only if you withdraw, take a Year Out or if you are finishing a course with us, regardless if you intend to continue studying on a new course. How long does it take you to process my loans? Once we have the necessary paperwork, loan certifications only take a few days but you must give yourself and us plenty of time to work on the loans in case there are any problems with documentation, credit history, etc. Remember, you are not the only student we work with! What s the difference between certifying and guaranteeing? The University must certify your loan before you can expect to receive funding. Once certified, the loans undergo additional processing via the US Government and if they are satisfied with the information provided, they will guarantee the loan. When do I get my Financial Aid Award Letter? We don t produce financial aid award letters but the US Government will provide you with disclosure statements that confirm your loan amounts and disbursement dates. All students will receive an from the University when their individual loans are guaranteed which provides details of the amounts, disbursement dates etc. 4

5 What about my visa? How do I prove I ve got these loans? If you need a student visa (for example, you are a new student, or you are changing course, or you must extend your current student visa) we can produce and mail you a specific letter to help you verify the loan funds you have secured. This letter can only be sent to you after your loans have been certified and guaranteed and pertains to federal loans only. Only original documents will be accepted for visa purposes. We cannot scan, fax or these letters to you. If you are borrowing a private loan with Sallie Mae, you need to obtain any relevant guarantee documentation directly from them. You must ask for the original guarantee or disclosure letter which they will mail to you. Can I use my loan money to pay my 2,000 deposit or things like my visa or flight to London? No. Loans cannot be disbursed to students until after enrolment is confirmed and as the deposit is due prior to this time, as well as pre-arrival costs like flights or visas, the loans will not be available to make those payments. All of these initial costs must be paid from personal funds but can be borrowed via the loans (with the exception of the visa) meaning you can essentially get that money back later when the loan funds are processed. Are all the University s courses eligible for US loans? No. Graduate/Postgraduate Certificates, short courses, Study Abroad, programmes classified as distance education and some research programmes are ineligible for federal loans. Our International: Introduction to the Study of Fashion course at LCF and our International: Introduction to Study in Design and Media Communication at LCC are also ineligible for federal loans. All our full-time degree courses are eligible for private loans, however. If you re unsure if your course is eligible, please ask us and make sure to provide us with the specific name of your course. How much can I borrow in Stafford loans? We cannot provide you with this information until we ve got your SAR. See our US Loan Guide in order to view the maximum amounts allowed, based on your level of study and your age. We presume you want the full allowance in Stafford funding as these loans have the lower interest rate, but if you don t, you must us to say otherwise. How much can I borrow in PLUS loans? Provided you are eligible for the PLUS loans (Parent or Graduate PLUS), you can borrow an amount up to the rest of your estimated cost of attendance. For example, if your maximum estimated cost of attendance is $50,000 and you are going to borrow a Stafford loan of $20,500, the most you could borrow on a PLUS loan is $29,500. 5

6 You must us with the amount you wish to borrow on the PLUS when you your MPN to us. If your parents are borrowing a PLUS loan for you, you must speak to them about the amount they wish to borrow before confirming this figure to the University. How many instalments will my loans come in? Federal loans must be disbursed in equal, multiple instalments based on the study period/terms of your course. For example, if your course has three terms, you will receive three equally proportioned loan instalments. Only private loans are allowed to disburse in a single instalment. There is NO NEGOTIATION with regards to this instalment policy which is enforced by the US Department of Education. We re happy to provide you with additional information about these federal regulations but we will not entertain people challenging this rule. The University cannot certify students for single instalments on the federal loans. Courses running from September/October to June/July will be allocated three instalments while courses running from January to December or October to September will receive two instalments. How do I pay my fees if I m receiving my loans in instalments? The University has agreed to implement a tuition fee payment instalment policy but only for students who are deemed fully-reliant on loan funding. This is defined as someone who borrows at least enough loan money to pay their full tuition fees. If you borrow a loan worth only $2,500, for example, the understanding is that you have the rest of your funding secured elsewhere and therefore can pay your full tuition fees at enrolment, as is typically required by the University. For students who have borrowed at least enough to pay their full tuition fees, each loan instalment will automatically be put towards your tuition and any excess funds will be refunded to you to use for your living costs. If there are any shortfalls, you ll be contacted to pay the difference. If your loans disburse in three instalments, fees will be paid in three instalments. If your loans disburse in two instalments, fees will be paid in two instalments. If you borrow just a private loan, which disburses in one instalment, then your fees will be paid in one instalment. Alternatively, students may still wish to pay their fees in full at the start of the year which is our standard tuition policy for all students. In this case, later loan instalments would then be fully refunded to you for living costs. We must ensure that each loan instalment is enough to pay the tuition payment as well as cover your living costs for the term. As a result, you may need to borrow several loans to accrue enough funding if you don t already have personal funds or scholarships. We are happy to help you calculate the correct loan values you ll need so that your loan instalments work for you. 6

7 How are the loans disbursed? The US Treasury wires the funds directly to the University s nominated bank account. Sallie Mae sends private loan funds via US dollar cheque to the University but we re working with them at present to have these funds wired for the 2015/2016 year. What exchange rate will you use when certifying my loans or when clearing my loan instalments? The exchange rate changes constantly so the money will be converted on the rate in operation at the time the funds are calculated or transferred. We use Western Union to receive and convert our US loan funds and they offer competitive rates. Please note that your disbursements will change throughout the year and you may end up either having more money than you thought or less money than you thought so please prepare for this and plan accordingly. How long does it take for me to have access to my loan money? You will be provided with a loan disbursement schedule (via ) after the loans have guaranteed. The loan disbursement date is the date when the funds leave the US...it does not mean we have access to the funds on that day. We work with a great volume of student loan funds and due to the nature of foreign currency transactions and currency conversions, it generally takes between 1-2 weeks after the disbursement date before we can provide you with a refund. How will I be refunded? Refunds are processed as cheques in Pounds Sterling. Can you wire the refund to me instead of me having to collect a cheque? We can wire the funds to you but you must have a UK account before this can happen. There may also be additional charges associated with processing a wire transfer. We prefer students to collect cheques, as they are faster to prepare, free to produce and enable us to ensure that the funds get to you without complication. Do I need to open a UK bank account? It is not a requirement to open a UK account but it is strongly recommended. It becomes inefficient and costly to send money between two countries and if you wish to have some of the loan funds wired back to the US, it may cause delays to your refund. How do I open a UK bank account? Once you are in the UK and have established a UK address, you must request and obtain a bank letter from your college registry/student administration office. Most US students tend to work with HSBC, Natwest, Barclays, Citibank, Lloyds or TSB. We can speak to you 7

8 more about bank accounts when you arrive. Can I pay my accommodation out of my loan money? Yes but please note that only certain Halls of Residence are financially managed by the University s Accommodation Team. If you live in one of the following Halls, we can allocate your loan money to your termly rental payments: Brooke Hall Camberwell Campus The Costume Store The Glassyard Building Will Wyatt Court Sketch House Highline Building If you live in a Hall of Residence NOT listed above, their management companies will have specific payment timelines and so you will have to arrange to make your housing payments yourself in advance and then you can refund yourself with the loan money later. It is your responsibility to inform us if you want to use your loan money towards your accommodation costs as these payments will not be allocated automatically. How are refunds processed from a Parent PLUS loan? Generally, the instalments of any federal loan must first be allocated towards tuition fees. This will occur with each loan instalment if you pay your fees via the instalment plan and have borrowed loans that are at least enough to pay the tuition fees. Excess loan funds are then typically refunded to the student directly with the understanding that the funds have been borrowed for educational costs and are to be used for living expenses. With regards to PLUS loans, if a parent wishes to have the funds returned to the US instead, the loan money will face two sets of currency conversions and refunds will take longer to be processed. It s the responsibility of the parent to inform us how they wish to have the money refunded. If we do not hear from the parent borrower in a timely fashion, the funds will be given to the student directly. What if I don t need my remaining loan instalments? If you feel you no longer need subsequent instalments, and provided you have no further debts to the University, subsequent loan instalments can be cancelled. If you wish to cancel a loan instalment, you must let us know before the money is wired from the US Treasury. If we receive the money and then you wish to return it, it will be your responsibility to return those funds. 8

9 You will be provided with your loan disbursement schedule via before you arrive in the UK so it is your responsibility to inform us if you do not want your instalment so that we can cancel the funds before they are sent. What are private loans? Private loans are outside of the federal loan regulations and do not follow a multiple instalment policy. They are generally disbursed in a single instalment at the start of the year and are secured based on credit checks and students having credit-worthy co-signers. The only private loan we can certify for our students is Sallie Mae s Smart Option Loan. Private loans have higher interest rates than federal loans but are convenient due to their disbursement policy. I just got offered a place and my course starts in a few weeks! Help! International students can generally enrol up to 4 weeks late but if you have not completed your FAFSA or if you have not applied for your loans, it s very unlikely you will be able to get your loan funding arranged in time for you to successfully receive the required visa paperwork, apply for the visa and arrive in the UK. You are advised to defer your place or, if possible, to pay your fees out of personal finances and then refund yourself later when the loans have arrived. When can I apply for my visa? International students are required to enter the UK on a student visa unless they are in possession of a UK/EU passport. If you are a student, and arrive in the UK without appropriate entry clearance, you risk being deported. It is your responsibility to organize your visa before you travel. There is ample information about student visas on the University s website: You must have an unconditional course offer, proof of all required funds secured and a CAS number issued by the University before applying for the visa. If you are reliant on loans, you must have your loans certified and guaranteed first before you book your visa appointment another reason why you must start the loan application procedure in a timely manner. I ve borrowed loans before and need to tell my previous lenders so that I don t go into repayment. What can I do? If you are being contacted by previous lenders about going into repayment, you will need to provide us with an In-School Deferment Form for those lenders. We will fill out the forms and submit them on your behalf. In-school deferment forms verify that you are still a student and therefore not eligible to start paying back your previous loans. Once you graduate, however, your past loans will go into repayment. Loans you borrow while studying at the University will have a 6-month 9

10 grace period meaning you won t have to make payments on the loan for 6 months. Please note that we can only fill out these forms for you once you are fully-enrolled which is defined as having gone to your in-person enrolment session and started attending your classes. Can I get a 1098-T form for tax purposes? The 1098-T form is only for US-based businesses and institutions so being based in the UK, we cannot complete this form for you. We can, however, prepare a letter to for you to use in lieu of the 1098-T. Please us to request this letter. Should you have additional questions that have not been answered here, in the US Loan Guide, or in the University s US Loan web pages, please contact: Melissa Chatton at m.chatton@arts.ac.uk (011 44)