Federal Direct Student Loan Workshop. Berkeley City College 2050 Center St Berkeley, Ca 94704

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1 Federal Direct Student Loan Workshop Berkeley City College 2050 Center St Berkeley, Ca 94704

2 Financial Aid Office Hours and Contact Information Office Hours: Monday & Tuesday: 8:30 am - 4:30 pm Wednesday: 8:30 am 6:30 Thursday: 8:30 am 4:30 pm Friday: 8:30 am 12:00 noon Question on your loan, please contact: Catherine Nichols at cnichols@peralta.edu

3 Understanding My Financial Options Nearly two-thirds of all college students today receive financial aid. The most common types of aid are grants, scholarships, workstudy and loans.

4 Financial Aid Options Grants are money awarded to students based on financial need, that students do not have to payback (e.g. Federal Pell Grants and Cal Grants). Scholarships are also free money, usually based on area of study or merit, such as good grades, high test scores, athletic or musical ability, special talents, heritage or community service. Work-study programs, funded by the federal government or colleges, lets students earn money in a job on or off campus to help pay for their education. Loans are money students borrow that must be repaid with interest.

5 Federal Direct Stafford Loans Federal Direct Stafford Loans are the largest source of federal aid and are for qualified undergraduate, graduate, career and professional students at all types of colleges.

6 Federal Direct Stafford Loans There are two types of Direct Stafford loans: Subsidized, for which the government pays the interest while students are in school. Unsubsidized, for which students pay all the interest on the loan.

7 Direct Stafford Loan Eligibility Students must submit a current FAFSA application Student must be enrolled in school at least half time Student must make satisfactory academic progress

8 Subsidized and Unsubsidized Direct Stafford loans Direct Subsidized Stafford loans are for students with financial need. When determining eligibility, colleges consider all financial resources, including federal Pell grants, Cal Grants, work-study and private scholarships. Direct Unsubsidized Stafford loans are for all qualified students regardless of their income or assets.

9 Example: Independent Student Budget = $18,388 Bogg - $1008 Pell - $5550 SEOG - $400 CWSP - $3000 Care - $1000 Remaining Budget = $7206

10 Federal Direct Stafford Loan Limits Academic Year Dependent Student Subsidized Dependent Student Unsubsidized Total for Dependent Student of Sub & Uns Independent Student Subsidized Independent Student Unsubsidized Total for Independent Student of Sub & Uns First Year(.5 to 30 units) Second Year ( 30.5 to 60 units) Total Loan Borrow Limits Dependent Undergraduate Independent Undergraduate $3,500 $2,000 $5,500 $3,500 $6,000 $9,500 $4,500 $2,000 $6,500 $4,500 $6,000 $10,500 $23,000 $8,000 $31,000 $23,000 $34,500 $57,500

11 Loan Reality Check Should I Borrow? Do I really need a student loan to pay for school? Only borrow what you need!

12 The True Cost of Student Loans It costs money to borrow. Students should be sure to know the true cost of their loans. In addition to interest charges, there may be an origination fee taken out of each loan disbursement. Moreover, borrowers who do not make their loan payments on time may be hit with late fees and collection cost.

13 Understanding Interest and Repayment For Direct Subsidized, if the first disbursement of your loan is between July 1, 2012 and June 30, 2013, the interest rate is fixed at 3.4 percent. For Direct Unsubsidized, the interest rate is fixed at 6.8 percent. There is a Origination Fee on all Direct Subsidized and Unsubsidized Loans.

14 Understanding Interest and Repayment The Origination Fee is a percentage of the amount of each loan you receive. For loans first disbursed between July 1, 2011 and June 30, 2013 the fee is 1.0%. It will deducted from each loan disbursement. When you receive your first Direct Loan, you will be contacted by the servicer for that loan (you repay your loan to the loan servicer). If you re not sure who your loan servicer is, you can find information on or call

15 Understanding Interest and Repayment After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you begin repayment. During this period, you'll receive repayment information from your loan servicer, and you'll be notified of your first payment due date. Payments are usually due monthly.

16 Calculating Repayment: Please visit under Repayment Plans & Calculators section.

17 Borrowing Tips! Borrow conservatively-only borrow what you need Budget wisely Plan ahead to repay your student loans Be aware of the monthly payments for the amount you borrow

18 How much Do I Really Need to Borrow? My monthly income x 12 My monthly expenses x 12 My Financial Award Total Cost of Attendance $18,388(Independent) Cost of Attendance $11,872(Dependent) Total-Cost of Attendance=

19 Delinquency If you fail to make the required payments on your loan(s) on time, your loan is delinquent. If you don t make payments for 270 days, your loan is then considered to be in Default. There are serious consequences of default (refer to the Default section for more information).

20 Deferment You can receive a deferment for certain defined periods. A deferment is a temporary suspension of loan payments for specific situations such as reenrollment in school, unemployment, or economic hardship.etc. You don t have to pay interest on the loan during deferment if you have a subsidized Direct. If you have an unsubsidized Direct, you re responsible for the interest during deferment.

21 Deferment If you don t pay interest as it accrues (accumulates), it will capitalize (added to the loan principal), and the amount you have to pay in the future will be higher You have to apply for a deferment to your loan servicer (the organization that handles your loan), and you must continue to make payments until you ve been notified your deferment has been granted. Otherwise, you may become delinquent or go into default. For the list of deferments reason visit:

22 Forbearance If you do not qualify for a deferment, consider requesting a forbearance from your loan holder. Forbearance is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty Unlike deferment, whether your loans are subsidized or unsubsidized, interest accrues, and the borrower (you) is responsible for repaying it. Your loan holder can grant forbearance in intervals of up to 12 months at a time for up to 3 years. You have to apply to your loan servicer for forbearance, and you must continue to make payments until you've been notified your forbearance has been granted.

23 Default In Default means you, the borrower, failed to make payments on your student loan according to the terms of your promissory note, which is the binding legal document you signed at the time you took out your loan. In other words, you failed to make your loan payments as scheduled. Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. Here are some consequences of default.

24 What Are the Consequences If I Default? National credit bureaus can be notified of your default, which will harm your credit rating, making it hard to buy a car or a house. You will be ineligible for additional federal student aid if you decide to return to school. Loan payments can be deducted from your paycheck. State and federal income tax refunds can be withheld and applied toward the amount you owe. You will have to pay late fees and collection costs on top of what you already owe and can be sued.

25 What Are the Consequences If I Right to deferment is lost. Default? Eligibility for further financial aid is stopped until the loan(s) is paid in full or is in repayment with EDFUND and the borrower has met all requirements for additional financial aid. The borrower's school may withhold academic transcripts. State and federal tax refunds may be "offset" (withheld) to repay the defaulted student loan(s). Wages may be garnished.

26 Berkeley City College Student Loan Serving Policies and Procedures Student Loan applications need to be turned in at our front counter, April 19 th 2013 is the last day to apply for a student loan for the spring 2013 semester. There will be no exceptions Continuing borrowers are required to attend the workshops to insure they are up-to-date with our most recent changes. Participation in the Student Loan Workshop does not guarantee student loan approval. Each student s application will be reviewed thoroughly before any decision is made. Continuing borrowers are not automatically approved for student loans. Financial Need, Satisfactory Academic Progress, Pell Grant and Loan History will be thoroughly assessed, when determining eligibility

27 Berkeley City College Student Loan Serving Policies and Procedures A Student who s EFC exceeds 5550 but does not exceed Cost of Attendance (COA), will be given first priority during the review process. In order to avoid overpayments, students who receive financial aid will be evaluated for loan eligibility, after all awards (Pell, SEOG, BOGG, Cal Grant, Work Study, EOPS, CARE, and Scholarships) are entered to Financial Aid System. Subsidized loans are need based loans, Students will be awarded Subsidized Loans based on need only. For example, an independent student whose EFC exceeds the COA, will only qualify for an unsubsidized loan.

28 Berkeley City College Student Loan Serving Policies and Procedures Student Loan Servicing will take anywhere from 4-6 weeks. All students must be thoroughly verified before certification of student loans. Please refer to Appendix A for Student Loan Servicing Procedure flow chart. Continuing students who have dropped to less-then-half time enrollment will be reported to NSLDS within 30 days of status change. Repayment status on their student loan is initiated. Continuing students who were granted a student loan and fail to meet enrollment requirements during their prior loan period are not eligible for recertification.