U.S. Financing Information

Transcription

1 U.S. Financing Information 1

2 U.S Financial Aid Planning to meet the costs of attending university is an investment for the future, and you may have many financing options, including grants, scholarships, part time work, and loans to choose from. Any U.S. student who applies to HEC Paris may apply for U.S. financial aid, either through the U.S. Federal loan program (Title IV) or through a private loan. The information in this booklet is provided to help US students to consider all the available options and guide them smoothly through the process. Whilst there are a limited amount of scholarships available to students through HEC Paris, we encourage all our students to investigate all available options including on and off campus funding. Non-university based or private scholarships are available from a wide variety of organizations research online at or collegeboard.com to see which options are available to you. Remember that deadline dates and application procedures may vary, and we advise all of our students to exercise extreme caution if they choose to use a commercial scholarship search company which requires a fee. The U.S. Department of Education requires institutions that participate in the Title IV loan programs disclose certain information to students. Should you require any further information please contact our dedicated Financial Aid Officer at usfunding@hec.fr. 2

3 Contents Introduction 2 Available US Loans 4 Eligibility and Assessment 5 Repayment - Options and Obligations 6 Refund and Return to Title IV Policy 11 Satisfactory Academic Progress 12 Leave of Absence 15 Glossary of Key Terms 16 3

4 Available U.S. Loans There are three main U.S loans available to students, details of which are outlined in the table below. For further details on any of aspect of the loans, please contact our Financial Aid Officer Loan Name Eligibility Criteria Based on financial need? Interest payments Interest Rate Extra Information Direct Stafford unsubsidized loan Direct Parent PLUS loan Direct Graduate PLUS loan Parents may be eligible if their child is a dependent undergraduate student as defined by the U.S, Department of Education. No Student borrowers are responsible from when the money is disbursed. May be paid as it becomes due or allowed to accumulate, as long as the student is in at least half-time enrolment. 6 months grace period after leaving university. No Repayments begin 60 days after the final loan disbursement. For loans disbursed on or after July 1 st 2009, and upon request, repayments can begin 6 months after the dependent for whom the loan was borrowed leaves university or drops below half time enrolment. No Repayments begin 60 days after the final loan disbursement. For loans disbursed on or after July 1 st 2009, and upon request, repayments can begin 6 months after the student leaves university or drops below half time enrolment. For all loans disbursed on or after July 1 st 2006, interest rate is fixed at 6.8%. For all loans disbursed on or after July 1 st 2009, the interest rate is fixed at 7.9%. For all loans disbursed on or after July 1 st 2009, the interest rate is fixed at 7.9%. Choosing to allow interest to accumulate will increase the overall amount you eventually pay. This loan has a maximum amount of $20,500 A credit check will be completed before the loan is approved. Should only be applied for AFTER applying for Stafford loans. Federal credit check process. 4

5 Eligibility and Assessment To be eligible for these loans you must be enrolled on a Full Time program. Your eligibility for U.S. financial aid will be assessed based on the information you provide on your Financial Aid Application. We strongly recommend that you use any financial aid package offered by the university to create a budget prior to departure to enable you to plan for your financial security during the upcoming academic year. Please refer to the MBA website: It is also recommended that you have sufficient funds for accommodation, books, supplies and any other personal expenses during the first eight weeks of classes in an event that there is a delay in your loans arriving from the U.S.. Borrowing Amounts The U.S. government specifies the maximum a student may be eligible to borrow through U.S. Title IV loans. The amount(s) awarded, however, may be lower than the maximum amounts specified by the U.S. government depending on the eligibility assessment and cost of attendance (COA) calculation. The cost of attendance is the total amount you may borrow. The eligible U.S. loan amounts are determined by the COA minus any other aid (estimated financial assistance) you are receiving for example, other loans, grants or scholarships. Graduate Students: The unsubsidized amount you may borrow (up to $20,500) equals your total cost of attendance minus EFA (estimated financial assistance). The Graduate PLUS amount you may borrow (up to $138,500 of which 467,500 can be subsidized) equals your total cost of attendance minus subsidized Stafford, minus EFA (estimated financial assistance). Cost of Attendance (COA) The cost of attendance (COA) is an estimate of your educational expenses for your enrolment period. The HEC Paris COA components are the same for all U.S. federal programs, as specified under U.S. law. The COA will specify the total amount you may borrow through U.S. Title IV loans minus any other aid you may be receiving for that award period. French/U.S. dual citizens and permanent residents COA will be modified to reflect your student status category and any additional funding options that you may be eligible to apply for based on your dual nationality status. 5

6 Repayment - Options and Obligations Exit Counseling Students must complete online Exit Counseling before leaving the institution. Counseling will include information on your obligations, rights and options under the terms of your loan. The session will cover repayment options, deferments and other important information you may need during your repayment term. During the exit counseling you will need to provide the following information: Name and address of closest living relative. Two references (different from closest living relative) and with different addresses. Repayment Plans Before repayment starts you will be provided with repayment options and a repayment schedule from your loan servicer(s) for each type of loan you have taken out. If you do not receive these schedules towards the end of your grace period contact your servicer as repayment begins regardless of your awareness. The repayment process will go smoothly if you plan ahead. Start by understanding all your options. Repayment options you may choose include: Standard Repayment: under this plan your monthly payment will remain the same over the entire repayment period. This repayment plan is the most economical with the least amount of interest accruing over the term of the loan. The term is for a maximum of 10 years. You will be automatically placed on this repayment plan if you do not apply for a different one. Graduated Repayment: this plan begins with smaller payments followed by a gradual increase in payments at specified intervals. Under this plan you may pay more interest over the term of the loan. The term is for a maximum of 10 years. Income-Sensitive Repayment (FFEL loans only): this plan ties the size of your repayment to your income level with annual adjustments made to your repayment. The monthly repayment must be large enough to cover accrued interest. This plan also may increase the amount of interest you pay over the term of your loan. The term is up to 10 years. However, your lender can use forbearance to lengthen the term for up to five years (15 years total). Extended Repayment: this option is available for those who first borrowed on or after October 7, 1998 and who accumulated loans that totaled more than US$30,000. If you are one of these borrowers you may extend your Standard or Graduated Repayment Plan for up to a maximum of 25 years. Income Based Repayment (IBR): Under IBR, the required monthly payment is capped at an amount meant to be affordable based on the borrower s income and family size. You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan. If you repay under the IBR plan for 25 years and meet other requirements, you may have any remaining balance of your loan(s) cancelled. Additionally, if you work in public service and have reduced loan payments through IBR, the remaining balance after ten years in a public service job could be cancelled. For more important information about IBR go to and click on Repayment Plans & Calculators. 6

7 Income Contingent Repayment (ICR) (Direct Loans Only): Under ICR your monthly payments will be calculated each year on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of: 1. The amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or percent of your monthly discretionary income. If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized (added to the loan principal). The maximum repayment period is 25 years. If you haven't fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged. As of July 1, 2009, graduate and professional student Direct PLUS Loan borrowers are eligible to use the ICR plan. Parent Direct PLUS Loan borrowers are not eligible for the ICR repayment plan. For more important information about ICR go to and click on Repayment Plans & Calculators. Repayment Tools and Calculators When repaying your student loans, it is important to know the choices available to you and their differences. To review your repayment options, the loan guarantor ASA has developed a repayment comparison calculator. Please visit for more information. Loan Consolidation When you leave university you may have a number of loans. These loans may be with more than one lender and may have different terms. Repayment can become complicated if you have to make different payments at different times of the month. Consolidation is a way to make repayment of multiple loans less complicated. You can consolidate all your federal student loans into one loan with a fixed rate and a single, lower monthly payment. You pay no additional fees to consolidate your loans. More importantly, you may reduce the amount of each monthly payment by extending your repayment term. Always remember that a longer repayment term increases the amount of interest you pay over the term of your loan. Consolidation loans range from 10 to 30 years. Repayment options on consolidation loans include: Standard, Graduated, Income Sensitive, Income Based, and Income Contingent repayment plans. To be eligible for a consolidation loan, you must be in a grace period, repayment, deferment, or forbearance. 7

8 It is important to research loan consolidation carefully as you may lose some borrower benefits offered by your original lender. If you are uncertain of your loan amounts (principle and interest) and who owns your loans, you can track down your loans online at the National Student Loan Data System at The interest rate on a consolidated loan is determined by taking the weighted average of your current loans interest rates and rounding up to the nearest 1/8%. This interest rate is fixed, whereas your current loans may be variable. You should discuss consolidation with your current loan holder(s). If your loan holder does not consolidate they may be able to recommend another one who does. Consolidation Loan Terms: Loan Term Amount Owed 10 years Less than $7, years $7,500 to $9, years $10,000 to $19, years $20,000 to $39, years $40,000 to $59, years $60,000 or more Deferment - postponing repayment One advantage of borrowing through U.S. Title IV loan program is the option of postponing repayment for a period of time under certain conditions. However, it is important to note the interest requirements: Unsubsidized Stafford Loans and PLUS loans - the borrower is responsible for paying the interest that accrues while in-school, during applicable grace and authorized deferment periods. You must continue making repayments until you have been notified that a deferment is granted. Keep copies of all forms and correspondence related to your deferment. Common reasons for deferment include Economic hardship Unemployment Enrollment in school Graduate fellowship Rehabilitation training Military Service For more information, please see: 8

9 Forbearance - Postponing Repayment Borrowers in temporary financial difficulty with no deferment option available may request forbearance from your lender or servicer. Forbearance is granted at the loan holder s discretion and allows you to have months added to the term of your loan, temporarily reduce the amount of your monthly payment or temporarily suspend monthly payments. There are several forbearance options available, the two most common of which are: Economic Hardship Forbearance: If your education loan payments exceed 20% of your total monthly income you can apply for this type of forbearance. This type of forbearance is granted for periods of 12 months, with a maximum of 3 years allowed in total. Administrative Forbearance: May be granted by your lender if you are delinquent on payments prior to entering a period of deferment. Note that interest continues to accrue on your loan during forbearance. Interest must be repaid, which can result in higher monthly payments once the forbearance has ended. The federal government does not pay the interest on Stafford subsidized loans while your loans are in forbearance. For more information, please visit: Delinquency and Default When your monthly payment is 30 days or more overdue you are considered delinquent. Most loan holders will contact you about delinquent payments and begin collection activity. Delinquency may be reported to a Credit Bureau which may damage your credit rating. If you expect to have a problem making a monthly payment, contact your loan holder immediately. It is always easier to discuss alternatives before the due date rather than after a payment is late. To find your loan holder visit: Borrowers who are 270 days behind on a scheduled payment are legally in default on the loan agreement. The loan holder can assume that you are not going to repay and may declare the entire amount you owe, including interest, as immediately due and payable. Defaults are reported to Credit Bureaus and stay on your credit record whether or not you eventually pay off the loan. Consequences of default are SEVERE Borrowers are liable for late charges which can be added to the principal of the loan and interest will accrue. US federal income tax refunds may be withheld to repay the loan. Wages may be garnished (a portion withheld for repayment). Payment of attorney fees and court costs may be required. Borrowers may lose eligibility for all federal and state financial aid until satisfactory repayment arrangements are made for the defaulted loan. In a profession that requires a license to practice, that license can be denied renewal until you make satisfactory payment arrangements on your student loan. 9

10 Student Debt on Graduation Students attending HEC Paris have a variety of differing educational experiences, and the debt levels of each student reflect individual choices and knowledge about the usage of the loan programme options. We are committed to ensuring that students leave this institution with the lowest amount of debt possible and we will actively work with you to ensure this. Throughout your life cycle as a student utilizing U.S. financial aid we will be actively tracking your debt and benchmarking it with others who have studied in the same method and course as you. Average Indebtedness Statistics will be provided to students on completion of both entrance and exit counselling and upon the request of an enrolled student. 10

11 Refund and Return to Title IV Policy HEC Paris has a refund policy for international students attending this institution. The following is an addendum for students who are receiving U.S. Title IV financial aid. For students receiving U.S. Title IV financial aid that withdraw from the university and are eligible for a refund of fees paid for that period of enrolment, a determination must be made as to whether any of the refund money must be returned to the U.S. Title IV program. Pro-rated refund calculations are required for any student in receipt of U.S Title IV aid who withdraws before completing 60% of the payment period. If HEC Paris is required to return money on your behalf to the U.S. Title IV program as a result of your early withdrawal, you will be required to repay that money to HEC Paris. If it is determined that refund money must be returned to the U.S. Title IV aid program, the distribution of money returned to the lender/guarantor will be as follows: 1. Direct Unsubsidized Stafford 2. Direct PLUS After these calculations and repayments are made, any remaining refunds will be returned to you or your parents. In addition, you may also be required to pay back money to the U.S. Title IV program if you withdraw early from the university while in receipt of aid. We strongly recommend you contact the Financial Aid officer if you are considering early withdrawal to discuss your options and possible implications. 11

12 Satisfactory Academic Progress HEC Paris is required by U.S. Federal Law (34CFR ) to define and enforce standards of Satisfactory Academic Progress for students who wish to access U.S. financial aid. The guidelines have been established to encourage students to progress and successfully complete the academic program for which aid is received. Students who receive U.S. financial aid will be evaluated at the end of each term. This evaluation process will consider your progress under the following criteria: Academic Standing Maximum Timeframe To receive U.S. financial aid you must meet minimum standards for both the above mentioned components while simultaneously adhering to academic progress rules and French immigration legislation. Students in receipt of U.S. financial aid are entitled to modify their enrolment within the first two weeks of each term and retain eligibility for aid, provided they do not drop below half-time enrollment. Students who drop below half-time are not eligible for U.S. financial aid. Academic Standing Students in receipt of U.S. financial aid must achieve a cumulative Grade Point Average (GPA) of 2.5 or more at the end of each term. HEC Paris shows its grades alphabetically from A to F, which equates to a 4 point scale. GPA values for grades are as follows: MBA Grade GPA Values A 4 B 3.5 C 3 D 2.5 FX 1 F 0 Grande Ecole Grade GPA Values A 4 B 3.5 C 3 D 2.5 E 2 FX 1 F 0 12

13 Remedial, Non-credit Courses and Incompletes Non-credit courses will not be counted in assessing full-time status. A student is required to achieve a grade on any deferred or supplementary assessment within six months of completing a class. Please note that while a student may maintain their eligibility for U.S. Title IV loans, institutional academic progress rules and student visa restrictions may impact on your ability to continue within the program. Conversely, a student may lose eligibility for U.S. Title IV aid and still meet institution requirements for continued enrolment. Notification (Institutional Sample Policy) Satisfactory Academic Progress will be assessed for each student at the end of the term to determine your eligibility for continued award or disbursement of aid. You will be notified in writing, by and hard copy, if you are placed on probation or if your financial aid eligibility has been suspended. Financial Aid Probation and Suspension Satisfactory Academic Progress (SAP) will be assessed for each student at the end of each academic period to determine eligibility for continued award or disbursement of aid. A student will be notified in writing by both and hard copy if they are placed on Financial Aid probation or if their loan eligibility has been suspended. Students who fail to achieve the required GPA will be placed on Financial Aid probation for one term of study with the opportunity to increase the GPA to the required academic standing. Students who have been placed on probation and subsequently meet the GPA requirements in the next semester will be placed back into good SAP standing. Failure of all courses in which a student was enrolled in will result in an immediate suspension of aid. Students who have been placed on probation and do not meet the requirements applicable to degree and level will have their U.S. Title IV financial aid eligibility suspended and will be ineligible to receive this aid until such time as they achieve the required GPA. Students who transfer into a new academic program will also transfer with any SAP warning or sanction and will still need to meet the specified criteria in the new program before re-establishing eligibility to receive aid. Satisfactory Academic Progress Appeals Although HEC Paris cannot automatically waive the SAP requirement for any student to allow them to begin or continue receiving U.S. financial aid, SAP appeals for verifiable extenuating and unforeseen circumstances are available if you have met the appeal criteria. Students who have their eligibility for aid suspended may appeal the suspension if one or more of the following circumstances exist: Death of an immediate family member, i.e. parent, caregiver, spouse/partner, sibling, dependent child. Extended illness extended illness is defined as a documented chronic or recurring medical or emotional illness that causes the student to be absent from class at least 1 month or more in 2 consecutive terms. 13

14 Extended illness of a family member that places hardship on the student. Immediate family member includes parent, spouse/partner, caregiver, sibling, dependent child. Mitigating circumstances as determined by the Financial Aid Appeal Committee. Please note this list is not exhaustive All appeals must be received in writing within ten days of receipt of the Notice of Suspension. You must indicate in writing the reason(s) for failure to meet the SAP requirements and why financial aid should not be suspended. All documentation to support the appeal is required at the time of the appeal submission. The appeal will be considered on its merits and a response to the appeal will be provided within 5 working days. If this appeal is rejected you may appeal your suspension of aid by written appeal to the Dean. If you wish to undertake this option you must advise the Financial Aid officer within 10 days of receiving a response. At that time the Financial Aid officer will forward the documentation for submission to the Dean. Students who appeal the first appeal decision will be informed of the Dean s decision in writing, which is final. 14

15 Leave of Absence A Leave of Absence is a status in which the student is considered to be continuously enrolled for U.S. Title IV loan purposes, as approved by the university, but suspends studies for an agreed period of time due to extenuating circumstances for example an accident or medical problem. An approved Leave of Absence is a break in enrolment (not including a standard mid-term or end of term break) that is requested by the student and must be approved by the Financial Aid officer and relevant academic and institution staff. The student's request must be in writing and include the reason for the leave and any supporting documentation. If an approved Leave of Absence occurs, the student does not incur any additional charges and the enrolment status will remain as in-school. If approved, the student must return by the agreed date or the enrolment status will change to withdrawal effective from the last date of attendance before the leave of absence began. This withdrawal may have implications for grace and/or repayment obligations. Students who wish to suspend studies for a period of time must first submit a request to the Financial Aid officer for consideration before the desired start date of the Leave of Absence. If a Leave of Absence request is not submitted or approved, and the student ceases academic-related activity for a period of time during a term, this may be treated as an unofficial withdrawal from the institution for U.S. Title IV loan purposes and reported to your loan holder(s). 15

16 Glossary of Key Terms For clarification of key terms please consult the glossary below. Accrued Interest The interest accumulating on loans that is added to the principal loan amount at the time of repayment (if no interest payments are made while in university, in grace, or during an authorized period of deferment.) Award Letter An official letter issued by the Financial Aid officer at HEC Paris. The letter details the financial aid package for the relevant award year. Award Year The period of time for which your financial aid package has been awarded. Capitalization The process by which interest is added to the principal loan amount if you choose not to make interest payments while in university, grace or in forbearance (See Section C, Item 14 on the Direct Loan Master Promissory Note). This process increases the amount that must be repaid and will increase your monthly repayment. Cost of Attendance (COA) These expenses include tuition, living, books, insurance, travel and transportation for you, the student borrower, for the award year. The COA is determined by the Financial Aid officer in accordance with the U.S. federal guidelines. Cohort Default Rate This figure shows the percentage of HEC Paris students who borrowed money under the U.S. FFEL program and defaulted on their loans. The U.S. Department of Education calculates this rate annually to determine the default experience of students who attended a particular school during a particular period of time. Default When a borrower fails to make an installment payment within 270 days of the due date for monthly payments; or within 330 days of the due date for less frequent payments. Defaults can also occur if the borrower fails to meet other terms of the written agreement with the loan holder. Under these circumstances the U.S. Department of Education or loan servicer may reasonably conclude that the borrower no longer intends to honor the borrower s obligation to repay a loan, and will take appropriate action. 16

17 Deferment A period during which repaying the loan is suspended as a result of the borrower meeting one or more of a number of situations or categories established by U.S. law. The borrower does not pay interest on Direct Subsidized Loans during deferment; interest continues to accumulate during deferment of a Direct Unsubsidized, Direct PLUS, or private loan. Delinquency The loan status when payment is late. Delinquency may be reported to a credit bureau after 30 days. Direct Loan (Subsidized) A U.S. federal program that provides federally subsidized, low interest loans to students in undergraduate programs. The U.S. government pays the interest on subsidized loans while the borrower is enrolled at least half time, in grace or in an authorized deferment. They are awarded on the basis of financial need as determined by the FAFSA. Direct Loan (Unsubsidized) A U.S. federal program that provides low interest loans to students in undergraduate, graduate or professional full time programs. Unsubsidized loans are not awarded on the basis of financial need. Disbursement The payment of loan funds to the institution the date on which the Department of Education issues the funds. Disbursement is usually made in two or more installments during the year in accordance with U.S. Department of Education regulations. Expected Financial Assistance (EFA) The Expected Financial Assistance is the amount of all other awards, loans, scholarships, sponsorships/grants, etc. that a student (or the parents on behalf of the student) may receive. Expected Family Contribution (EFC) The Expected Family Contribution is the amount that a student and family (if required) are expected to contribute towards the cost of attendance. This amount is based on the students or the family s income and assets as calculated by the FAFSA (Free Application Form Student Aid) and is used in the calculation of a student s eligibility for subsidized loans. Financial Aid Officer A staff member who is responsible for managing the Federal Loan process, compliance and administration procedures. The Financial Aid officer also certifies or approves your federal loan application and the amount you can borrow; in the U.S. this official would be known as the Financial Aid Director. 17

18 Financial Need The difference between the Cost of Attendance and the Expected Family Contribution plus Estimated Financial Assistance. Forbearance A suspension or temporary reduction of monthly payments. You must contact your loan holders(s) directly to receive forbearance. Interest will continue to accrue on all loans, including Direct Subsidized, during a period of forbearance. Free Application for Federal Student Aid (FAFSA) This is the U.S. federal application that a student must file to apply for financial aid. The FAFSA is available online at Grace Period A period of six months after you leave the institution or drop below half-time enrollment before you must start monthly repayments on your Direct Subsidized and unsubsidized loan(s). Graduate Direct PLUS Loan Graduate students may borrow this federal loan on their own behalf to cover the difference between the Cost of Attendance and all other awarded aid, after applying for other Direct Loan aid. Interest The fee charged by the loan holder in exchange for lending the money. The interest rate, usually expressed as a percentage of the loan amount, may stay the same for the term of the loan (fixed rate) or it may change periodically (variable rate). Interest rates for loans first disbursed on or after July 1, 2010; different rates apply for loans disbursed prior to this date; see for more details. Loan Type Interest Rate Subsidized Loans Undergraduate: 4.5% Graduate: 6.8% Unsubsidized Loans 6.8% PLUS Loans 7.9% Generally, interest rates on Consolidation Loans are fixed rates calculated as the weighted average of the loans being consolidated rounded up to the next higher 1/8 percent, not to exceed 8.25%. Loan Fee A fee charged by the Federal Government and deducted from the loan funds prior to disbursement. The fee is used to offset administrative costs. For Direct Subsidized and Unsubsidized Loans disbursed after July 1, 2010, the fee is 1%. For Direct PLUS Loans the fee is 4%. 18

19 Master Promissory Note (MPN) A legally binding document between the borrower and the Department of Education that obligates the borrower to repay the loan in accordance with its terms. Parent Direct PLUS Loan A federal loan available to the parents of dependent, undergraduate students. While parents of all income levels are eligible, a credit-worthiness evaluation is carried out. Principal The amount borrowed. This is the amount on which interest is charged. Student Aid Report (SAR)/Institutional Student Individual Report (ISIR) The report sent directly to a student from the U.S. Department of Education s Central Processing System (CPS) that summarizes information submitted on your FAFSA. It also provides figures used in financial need calculations, including the student s estimated family contribution (EFC). The ISIR is the electronic version forwarded to the university. Satisfactory Academic Progress (SAP) Achieving the required Grade Point Average (GPA) within the defined timeframes to ensure continued access to financial aid. Servicer A Servicer is a company contracted by the U.S. Department of Education to handle administrative aspects of the loan such as collection of payments, correspondence with borrowers, address changes, loan status updates. It is important to know the name of your Servicer since quite often all communication regarding your loan will be with the Servicer. 19