Answers To Your College Loan Questions

Answers To Your College Loan Questions 23625 Commerce Park, Suite 200 Beachwood, OH 44122 866-207-5545 2015-2016 Beachwood, OH 44122 866-207-5545

Contents Federal Direct Student and Parent Loan Interest Rate Update 05/13/2015 2 Federal Direct Student and Parent Loan Interest Rate Chart 3 2015-2016 Loan Frequently Asked Questions 4 2015-2016 Federal Loan Programs Federal Perkins Loan 8 Federal Subsidized and Unsubsidized Loans 10 Direct PLUS Loan for Parents 15 Credit Check for the PLUS Loan 18 Federal Loan Program Comparison Chart 19 The Master Promissory Note 20 Direct Loan Entrance Counseling 21 Direct Loan Exit Counseling 22 Step-by-Step Instructional Help Guides Step-by-Step Instructions for Signing the Master Promissory Note for Direct Loans 23 Step-by-Step Instructions for Completing Entrance Counseling for Direct Loans 29 Step-by-Step Instructions to apply for the Direct PLUS Loan 50 Top Commercial/Private Alternative Education Loans 58 Discover Student Loan (Discover Bank) 58 Wells Fargo Collegiate Loan (Wells Fargo) 60 Smart Option Student Loan (Sallie Mae) 61 Citizens Bank Student Loan for Parent (Citizen Bank) 62 Citizens Bank Student Loan (Citizen Bank) 63 The PNC Solution Loan for Undergraduates (PNC Bank) 64 Union Federal Private Student Loan (Union Federal Savings Bank) 65 Wells Fargo Student Loan for Parents (Wells Fargo) 66 SunTrust Custom Choice Loan (SunTrust Bank) 67 SoFi Student Loans (Social Finance Inc.) 68 Private Loan FAQs 69 Private Loan Comparison Chart 70 Loan Options: Pros and Cons 72 Information Regarding Loan Consolidation 74 Glossary 76 Resource Websites 81 1

Federal Direct Student and Parent Loan Interest Rate Update, 5/14/2015 The United States Treasury completed an auction of the 10-year note on Wednesday, 5/13/15, selling the notes at a yield of 2.24%. This is 0.37% lower than the yield produced during the 10-year note auction this time in 2014. Since this yield is the yield upon which federal student loan interest rates are based, this means that federal student loan interest rates will also decrease by 0.37% for the 2015-2016 school year (for the time being). For Stafford Loans, which is a federal form of aid reserved for undergraduate students, the 0.37% drop in 10-year yield means that the interest rate will go from its current 4.66 % fixed rate to a 4.29% fixed rate for loans disbursed July 1, 2015 until June 30, 2016. (The 0.37% decrease is the same for Subsidized Stafford Loans, for which the interest does not accrue while the student is in school, and Unsubsidized Stafford Loans, for which the interest does accrue.) For the Direct PLUS Loan, which are available to undergraduate parents, the existing 7.21 % fixed rate will decrease to 6.84 % on July 1, 2015. The 5/13/15 decrease in rates does not change the terms of loans that have already been disbursed (and that carry a fixed rate). Similarly, the 10-year auction does not change the terms of federal loans that are in repayment. 2

Federal Student and Parent Loan Interest Rate Chart by School Year for the Direct Stafford Loans and the Direct PLUS Loans for Parents Fixed Rates Borrower Undergraduate Students Parents Loan Type Date of First Disbursement Fixed Interest Rate Direct Subsidized and NEW: 7/1/15 6/30-16 4.29% Unsubsidized Loans 7/1/14 6/30/15 4.66% Direct Unsubsidized Loans 7/1/13 6/30/14 3.86% Direct Subsidized Loans Direct PLUS Loans 7/1/06 6/30/13 6.80% 7/1/13 6/30/14 3.86% 7/1/11 6/30/13 3.40% 7/1/10 6/30/11 4.50% 7/1/09 6/30/10 5.60% 7/1/08 6/30/09 6.00% NEW: 7/1/15 6/30-16 6.84% 7/1/14-6/30/15 7.21% 7/1/13-6/30/14 6.41% *Graduate and professional students are not eligible to receive Direct Subsidized Loans for loan periods beginning on or after July 1, 2012. 3

What are the Federal Loan Programs? 2015-2016 LOAN FREQUENTLY ASKED QUESTIONS There are 4 types of loans awarded by the federal government: Federal Direct Subsidized Loan Federal Direct Unsubsidized Loan Federal Perkin s Loan Federal PLUS Loan What are the current interest rates for Federal Loans disbursed AFTER July 1, 2015? The interest rates vary by the type of loan- all interest rates are fixed: Federal Direct Subsidized Loan a. 4.29% Federal Direct Unsubsidized Loan a. 4.29% Federal Perkin s Loan a. 5% Federal PLUS Loan a. 6.84% What are the current interest rates for Federal Loans disbursed after July 1, 2014 but BEFORE July 1, 2015? The interest rates vary by the type of loan- all interest rates are fixed: Federal Direct Subsidized Loan a. 4.66% Federal Direct Unsubsidized Loan a. 4.66 % Federal Perkin s Loan a. 5% Federal PLUS Loan a. 7.21% Why aren t the interest rates for federal student loans the same every school year? In 2013 Congress passed and the President signed the Bipartisan Student Loan Certainty Act of 2013, which tied federal student loan interest rates to financial markets. Under this Act, interest rates will be determined each June for new loans being made for the upcoming award year, which runs from July 1 to the following June 30. Each loan will have a fixed interest rate for the life of the loan. The College Planning Network will update this Loan Manual every year once the new annual rates become active. 4

What are the interest rates for Private Loans? Interest rates for Private Loans are variable and are given based on the borrower or the co-signer s credit scores. The higher the borrower or co-signer s credit score, the lower the interest rate will be. Are Federal Loans better than a Private Loan? Which has a lower interest rate? You may be able to qualify for a lower interest rate with a private loan, but the interest rate is variableusually based on the Prime or LIBOR index. These are both currently at a low, but it cannot be predicted how they will change over the course of the next 4 years while in college or during your repayment period. There are also many repayment benefits with the federal student loans including loan forgiveness after 10-20 years depending on your occupation and income based repayment (monthly payment is based on your income level and family size). Private lenders do not offer loan forgiveness or income based repayment. When will I find out what loans I have been awarded from the college? The Federal Direct Loans awarded to you will be included on your financial aid award from the college. Most colleges send their financial aid awards between the middle of March and the middle of April. The award will let you know if you have been awarded the subsidized or unsubsidized loan. If you qualify for the Federal Perkins Loan, it will also be included on your financial aid award letter. Some colleges will include the Parent PLUS Loan eligibility on your financial aid award; some require you to request the loan first. Either way, your parent(s) must apply for this loan and have an acceptable credit history to receive this loan. Private Loans require you to seek out a lender and apply for the loan. Your college may provide you with a list of lenders, but won t usually tell you exactly which loan to apply for because they are not familiar with your financial situation and do not want to get in trouble for giving a lender preferential treatment or risk being involved in predatory lending. Some colleges (mostly Ivy League or Non-Accredited colleges) do not include Federal Loans on their awardsif you are not awarded a Federal Loan, and you would like to take one out to assist in paying for college, check with your college s financial aid office to see if they participate in these loan programs. How are loans disbursed? Loans are paid directly to the college and applied to the balance of your college bill. If any amount is left over it will be refunded to the borrower to be used toward living expenses and other outside educational cost such as books and a computer. Some colleges will ask you to fill out a form instructing them on what to do with excess funds- apply them to past balances, put them on your college account or send a check for the refund. Most loans are disbursed at the beginning of each semester or quarter (depending on the system your college uses). For example, if your school is on semesters half of your loan will be disbursed in the fall and the other half in the spring. If there is any amount left over it will be sent to the student at the beginning of each semester. 5

Use of Your Loan Money You may use your loan money only to pay for authorized educational expenses at the school that certified your loan eligibility. Authorized educational expenses include: Tuition Room and board Institutional fees Books Supplies Equipment Dependent child care expenses Transportation and commuting expenses Rental or purchase of a personal computer Loan fees Other documented, authorized costs. Why do I need to apply for loans every year? Costs involved with college change each year and your family s financial situation might also change to increase or decrease financial aid. These changes will affect the amount you need to borrow from loans so you have to apply for a new loan with the specific amount each year. Terms to borrow may also change. Qualifying for a loan one year does not guarantee you ll qualify for it again the next year, especially if your credit score decreases. You Must Repay Your Loans You must repay the full amount of your loans, even if you: Do not complete your program of study, or do not complete the program within the normal time for completing it; Cannot find employment after graduation; or Are not satisfied with or did not receive from your school the education or other services that you paid for with your loan. **Although your credit history was not taken into account when you received federal student loans, your credit history will be affected if you do not repay your federal student loans under the repayment plan you agree to when you enter repayment. Changes You Must Report It is your responsibility to contact your Direct Loan servicer and your school if you: 1. Stop attending school or drop below half-time enrollment 2. Graduate 3. Fail to enroll at the school that determined you were eligible to receive your loan 4. Do not enroll at least half-time for the loan period certified by your school 6

5. Transfer to another school 6. Change your name, address, or phone number Are there any alternatives to taking out a loan? There are some alternatives to taking out a loan to pay for college. These alternatives can be discussed with your college funding advisor. Your college funding advisor is most familiar with your financial situation and can answer your specific questions regarding funding alternative. Who Do I Contact to Get More Information Regarding My Loan Status? Because your school determines your loan eligibility, contact your school's financial aid office to receive the most up to date information regarding your loan status. Once you receive the first disbursement of your loan, contact your loan servicer with repayment questions. 7

FEDERAL PERKINS LOAN The Federal Perkins Loan is a low-interest loan for both undergraduate and graduate students with exceptional financial need. Here s a quick overview of Federal Perkins Loans: Available to undergraduate, graduate, and professional students with exceptional financial need. Interest rate for this loan is 5%. Not all schools participate in the Federal Perkins Loan Program. You should check with your school's financial aid office to see if your school participates. Your school is the lender; you will make your payments to the school that made your loan or your school s loan servicer. Funds depend on your financial need and the availability of funds at your college. Am I eligible for a Perkins Loan? You may be eligible for a Perkins Loan if you are: an undergraduate, graduate, or professional student with exceptional financial need; enrolled full-time or half-time; and attending a school that participates in the Federal Perkins Loan Program. How much can I borrow? The amount you can borrow depends on your financial need, the amount of other aid you receive, and the availability of funds at your college or career school. You should apply for federal student aid early to make sure you are considered for a Perkins Loan. Due to limited funds, not everyone who qualifies for a Perkins Loan will receive one. If you are an undergraduate student, you may be eligible to receive up to $5,500 a year. The total you can borrow as an undergraduate is $27,500. Other than interest, is there a charge for this loan? No, there are no other charges. However, if you skip a payment, if it's late, or if you make less than a full payment, you might have to pay a late charge plus any collection costs. How will I receive my loan? The school will apply your loan funds to your school account to pay for tuition, fees, room and board, and other school charges. If any loan funds remain, your school will issue you a refund to help pay for your other education expenses. Can I cancel a loan? Yes. Before your loan money is disbursed, you may cancel all or part of your loan at any time by notifying your school. After your loan is disbursed, you may cancel all or part of the loan within certain time frames. 8

Your promissory note and additional information you receive from your school will explain the procedures and time frames for canceling your loan. When do I have to pay back my Perkins Loan? If you are attending school at least half-time, you have nine months after you graduate, leave school, or drop below half-time status before you must begin repayment. If you are attending less than halftime, check with your college or career school to find out how long your grace period will be. 9

FEDERAL SUBSIDIZED AND UNSUBSIDIZED LOANS Direct Loans (or Stafford Loans ) are government loans made to students rather than their parents. These loans are guaranteed by the federal government and offer flexible repayment options. There are two types of Federal Stafford Loans: subsidized and unsubsidized. Depending on household income, a student may be eligible for one or both varieties of student loans. After your FAFSA is processed, your school will review the results and will inform you about your loan eligibility. What s the difference between Direct Subsidized Loans and Direct Unsubsidized Loans? In short, Direct Subsidized Loans have slightly better terms to help out students with financial need. Here s a quick overview of Direct Subsidized Loans: Direct Subsidized Loans are available to undergraduate students with financial need. Your school determines the amount you can borrow, and the amount may not exceed your financial need. For a subsidized loan, the U.S. Department of Education pays the interest while you re in school at least half-time, for the first six months after you leave school (referred to as a grace period), and during a period of deferment (a postponement of loan payments). Here s a quick overview of Direct Unsubsidized Loans: Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need. Your school determines the amount you can borrow by considering the cost of attendance and other financial aid you receive. For an unsubsidized loan, you are responsible for paying the interest during all periods. o If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan). Am I eligible for a Direct Subsidized Loan or a Direct Unsubsidized Loan? To receive either type of loan, you must be enrolled at least half-time at a school that participates in the Direct Loan Program. Generally, you must also be enrolled in a program that leads to a degree or certificate awarded by the school. Direct Subsidized Loans are available only to undergraduate students who have financial need. Direct Unsubsidized Loans are available to both undergraduates and graduate or professional degree students. You are not required to show financial need to receive a Direct Unsubsidized Loan. Is there a time limit on how long I can receive loans? If you are a first-time borrower on or after July 1, 2013, there is a limit on the maximum period of time (measured in academic years) that you can receive Direct Subsidized Loans. This time limit does not apply to Direct Unsubsidized Loans or Direct PLUS Loans. If this limit applies to you, you may not receive Direct Subsidized Loans for more than 150 percent of the published length of your program. This is called your 10

maximum eligibility period. Your maximum eligibility period is based on the published length of your current program. You can usually find the published length of any program of study in your school s catalog. For example, if you are enrolled in a four-year bachelor s degree program, the maximum period for which you can receive Direct Subsidized Loans is six years (150 percent of 4 years = 6 years). If you are enrolled in a two-year associate degree program, the maximum period for which you can receive Direct Subsidized Loans is three years (150 percent of 2 years = 3 years). Because your maximum eligibility period is based on the length of your current program of study, your maximum eligibility period can change if you change to a program that has a different length. Also, if you receive Direct Subsidized Loans for one program and then change to another program, the Direct Subsidized Loans you received for the earlier program will generally count toward your new maximum eligibility period. Certain types of enrollment may cause you to become responsible for the interest that accrues on your Direct Subsidized Loans when the U.S. Department of Education usually would have paid it. These enrollment patterns are described below. Do I become responsible for paying the interest that accrues on my Direct Subsidized Loans because... I am no longer eligible for Direct Subsidized Loans and I stay enrolled in my current program? I am no longer eligible for Direct Subsidized Loans, did not graduate from my prior program, and am enrolled in an undergraduate program that is the same length or shorter than my prior program? I transferred into the shorter program and lost eligibility for Direct Subsidized Loans because I have received Direct Subsidized Loans for a period that equals or exceeds my new, lower maximum eligibility period, which is based on the length of the new program? I was no longer eligible for Direct Subsidized Loans, did not graduate from my prior program, and am enrolled in an undergraduate program that is longer than my prior program? I lose eligibility for Direct Subsidized Loans and immediately withdraw from my program? I graduated from my prior program prior to or upon meeting the 150 percent limit, and enroll in an undergraduate program that is the same length or shorter than my prior program? I enroll in a graduate or professional program? I enroll in preparatory coursework that I am required to complete to enroll in a graduate or professional program? I enroll in a teacher certification program (where my school does not award an academic credential)? Yes X X X No X X X X X X How do I apply for a loan? To apply for a Direct Loan, you must first complete and submit the FAFSA. Your school will use the information from your FAFSA to determine how much student aid you are eligible to receive. Direct Loans are generally included as part of your financial aid package. 11

What are the interest rates from 7/1/15 to 6/30/16? Here are the interest rates for loans first disbursed between July 1, 2015, and June 30, 2016. Undergraduate Students Direct Subsidized Loans 4.29% Direct Unsubsidized Loans 4.29% What are the interest rates from 7/1/14 to 6/30/15? Here are the interest rates for loans first disbursed between July 1, 2014, and June 30, 2015. Undergraduate Students Direct Subsidized Loans 4.66% Direct Unsubsidized Loans 4.66% Other than interest, is there a charge for this loan? Yes, there is a 1.073% loan fee on all Direct Subsidized Loans and Direct Unsubsidized Loans. The loan fee will be proportionately deducted from each loan disbursement. Can I change the Unsubsidized Loan awarded to a Subsidized Loan? You cannot make this change; the college that awarded the loan is the only one that can make the change. You must appeal to the financial aid office at the college and request part of the Unsubsidized Loan to be redistributed into a Subsidized Loan. This is not always a successful appeal because the Subsidized Loan is awarded based on financial need; you usually must show a special circumstance that increases your need to qualify for the change. How much can I borrow? For Direct Subsidized and Direct Unsubsidized Loans, there are limits on the maximum amount you may borrow for an academic year (annual loan limits). The total combined amounts a student may borrow in subsidized and unsubsidized Stafford loans may not exceed the annual loan limits. If you're a dependent undergraduate student, each year you can borrow up to: 1. $5,500 (for the 2014-15 academic year) if you're a first-year student enrolled in a program of study that is at least a full academic year. No more than $3,500 of this amount may be in subsidized loans. 12

2. $6,500 (for the 2014-15 academic year) if you've completed your first year of study and the remainder of your program is at least a full academic year. No more than $4,500 of this amount may be in subsidized loans. 3. $7,500 if you've completed at least two years of study and the remainder of your program is at least a full academic year. No more than $5,500 of this amount may be in subsidized loans. Loan Borrowing Limits Per Academic Year (Fall and Spring) Dependent Year Maximum Subsidized Additional Unsubsidized Combine Subsidized & Unsubsidized Freshman $3,500 $2,000 $5,500 Sophomore $4,500 $2,000 $6,500 Junior/Senior $5,500 $2,000 $7,500 **The lifetime loan limit for a dependent undergraduate is $31,000; of which $23,000 can be subsidized NOTE: A dependent student whose parent has been denied a PLUS loan during the current aid year may be eligible to receive an additional Unsubsidized Direct Loan of $4,000 with proof of PLUS loan denial from the lender. A PLUS loan letter of denial from the lender is only valid for one aid year. What additional steps must I take to receive my loan? If your financial aid package includes federal student loans, your school will tell you how to accept the loan. If it is your first time receiving a Direct Loan, you will be required to: Complete entrance counseling, a tool to ensure you understand your obligation to repay the loan. Sign a Master Promissory Note (MPN), agreeing to the terms of the loan. Contact the financial aid office at the school you are planning to attend for details regarding the process at your school. How will I receive my loan? The school will first apply your loan funds to your school account to pay for tuition, fees, room and board, and other school charges. If any additional loan funds remain, they will be returned to you. All loan funds must be used for your education expenses. When do I have to pay back my loans? When you receive your first Direct Loan, you will be contacted by your loan servicer (you repay your loan to the loan servicer). Your loan servicer will provide regular updates on the status of your Direct Loan, and any additional Direct Loans that you receive. After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you are required to 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. 13

What types of loan repayment plans are available? There are several repayment options available that are designed to meet the individual needs of borrowers. Your loan servicer can help you understand which repayment options are available to you. Generally, you ll have 10 to 25 years to repay your loan, depending on the repayment plan that you choose. What if I have trouble repaying the loan? If you are unable to make your scheduled loan payments, contact your loan servicer immediately. Your loan servicer can help you understand your options for keeping your loan in good standing. For example, you may wish to change your repayment plan to lower your monthly payment or request a deferment or forbearance that allows you to temporarily stop or lower the payments on your loan. Can my loan be canceled, forgiven, or discharged? Yes. Before your loan money is disbursed, you may cancel all or part of your loan at any time by notifying your school. After your loan is disbursed, you may cancel all or part of the loan within certain time frames. Your promissory note and additional information you receive from your school will explain the procedures and time frames for canceling your loan. Under certain conditions, you may have all or part of your loan canceled, discharged, or forgiven. 14

DIRECT PLUS LOAN FOR PARENTS Direct PLUS loans are federal loans that parents of dependent undergraduate students can use to help pay education expenses. Here s a quick overview of Direct PLUS Loans: The U.S. Department of Education is the lender. The borrower must not have an adverse credit history. Loans have a fixed interest rate of 6.84% from 7/1/15 to 6/30/16. If a loan is first disbursed between 7/1/14 and 6/30/15, it has a fixed interest rate of 7.21%. The maximum loan amount is the student s cost of attendance (determined by the school) minus any other financial aid received. Am I eligible for a Direct PLUS Loan? Parent Borrowers of a Direct PLUS Loan: 1. Must be the biological or adoptive parent of a dependent undergraduate or the spouse of the parent whose income and assets were reported on the FAFSA. 2. Must not have an adverse credit history or must obtain an endorser. (An endorser is someone who agrees to repay a Direct PLUS Loan if the borrower does not repay the loan.) 3. And their dependent child: a. Must be a U.S. citizen or eligible noncitizen b. Must not be in default on any federal education loans or owe an overpayment on a federal education grant c. Must be enrolled at least half-time at a school that participates in the Direct Loan Program and meet the general eligibility requirements for the Federal Student Aid programs, including filing a FAFSA How do I apply for a Direct PLUS Loan? In order to receive a Direct PLUS loan, you (or your child, in the case of parent borrowers) must complete the FAFSA. The school's financial aid office will provide instructions about their process for requesting a Direct PLUS Loan. Can I still receive a Direct PLUS Loan if I have an adverse credit history? A credit check will be performed during the application process. If you have an adverse credit history, you may still receive a Direct PLUS Loan by obtaining an endorser who does not have an adverse credit history or documenting to the U.S. Department of Education s satisfaction extenuating circumstances relating to your adverse credit history. If you are a parent borrower, the endorser cannot be the child on whose behalf you are borrowing. If a parent borrower is unable to secure a PLUS loan, the undergraduate dependent student may be eligible for additional unsubsidized loans to help pay for his or her education. The dependent student should contact the school s financial aid office for more information. 15

What additional steps must I take to receive my loan? If you are eligible for a Direct PLUS Loan, you will be required to sign a Master Promissory Note (MPN), agreeing to the terms of the loan. Contact the financial aid office at the school your child is planning to attend for details regarding the process at that school. How much can I borrow? The maximum PLUS loan amount you can borrow is the cost of attendance (determined by the school) minus any other financial assistance received. What is the current interest rate? The interest rate for Direct PLUS Loans is a fixed rate of 6.84% from 7/1/15 through 6/30/16. Direct PLUS loans first disbursed between 7/1/14 through 6/30/15 have a fixed rate of 7.21%. Other than interest, is there a charge for this loan? Yes, there is a 4.292% loan origination fee on all Direct PLUS Loans. The fee will be proportionately deducted from each loan disbursement. How will I receive my loan? The school will first apply Direct PLUS Loan funds to the school account to pay for tuition, fees, room and board, and other school charges. If any loan funds remain, your school will give them to you to help pay other education expenses. How do I pay back my loan? When you receive your Direct PLUS Loan, you will be contacted by your loan servicer. Your loan servicer will provide regular updates on the status of your Direct PLUS Loan and will provide you with information on how and when to repay your loan. When do I begin repaying my loan? Your Direct PLUS Loan enters repayment once your loan is fully disbursed (paid out). If you are a parent borrower, you may contact your loan servicer to request a deferment; while you or your child are enrolled at least half-time for an additional six months after your child ceases to be enrolled at least half-time. If your loan is deferred, interest will accrue on the loan during the deferment. You may choose to pay the accrued interest or allow the interest to capitalize when the deferment period ends. Your loan servicer will notify you when your first payment is due. What types of repayment plans are available? There are several repayment plans that are designed to meet the different needs of individual borrowers. 16

What if I have trouble repaying the loan? If you are unable to make your scheduled loan payments, contact your loan servicer immediately. Your servicer can help you understand your options for keeping your loan in good standing. For example, you may wish to change your repayment plan or request a deferment or forbearance that allows you to temporarily stop or lower the payments on your loan. As a parent borrower, can I transfer my loan to my child? No, a Direct PLUS Loan made to a parent cannot be transferred to the child. You, the parent, are responsible for repaying the loan. Can my loan ever be canceled or forgiven? Yes. Before your loan money is disbursed, you may cancel all or part of your loan by notifying your school. After your loan is disbursed, you may cancel all or part of your loan within certain time frames. Your promissory note and additional information you receive from your school will explain the procedures and time frames for canceling your loan. You also may qualify for forgiveness of some or your entire loan if you meet certain conditions. 17

Credit Check for the PLUS Loan Does my debt to income ratio, credit score, or employment status count against me? These factors are not taken into account when your credit history is reviewed. A lack of credit is not considered adverse credit. What is considered "Adverse Credit"? Adverse Credit Conditions include but are not limited to: Bankruptcy (Chapters 7, 11, or 12 within the past 5 years). (Note: Department Policy does not consider Chapter 13 bankruptcy as adverse credit.) Voluntary surrender within the last 5 years. Repossession within the last 5 years. Foreclosure proceedings started. Foreclosure within the last 5 years. Deed in lieu of foreclosure. Accounts currently 90 days or more delinquent. Unpaid collection accounts. Charge offs/write offs. Wage garnishment within the last 5 years. Defaulted loan that has been claim paid. Lease or contract terminated by default. County/State/Federal tax lien, within the past 5 years. What are my options when I am declined? You may either obtain an endorser, or you may choose to document extenuating circumstances relating to the reason you were declined. Contact the school's financial aid office as soon as possible to let them know whether you plan to pursue a Direct PLUS Loan by obtaining an endorser or submitting documentation of extenuating circumstances. If you decide not to pursue a Direct PLUS Loan, the school's financial aid administrator may be able to provide information concerning other options to assist you with paying for your or the student's education. Obtain an Endorser An endorser is someone who does not have an adverse credit history and agrees to repay the loan if you do not repay it. If you are a parent borrower, the endorser may not be the student on whose behalf you are requesting the Direct PLUS Loan. If you choose to obtain an endorser, the endorser may complete the endorser addendum on the StudentLoans.gov Web site. To complete the endorser addendum online, the endorser will need the Loan Reference Number (if you completed a Direct PLUS Loan Request) or Loan/Award Identification Number and a Federal Student Aid ID. If you completed a Direct PLUS Loan Request, the Loan Reference Number may be found in the confirmation email you received or may be found by logging in to the StudentLoans.gov Web site and selecting "Direct PLUS Loan Requests" located on the left navigation bar. If you did not complete a Direct PLUS Loan Request, the Loan/Award Identification Number may be obtained from the school. If the endorser does not have an FSA ID, they may obtain one by visiting the FSA ID Web site at https://fsaid.ed.gov/npas/index.htm. Document Extenuating Circumstances Document to the satisfaction of the U.S. Department of Education that: The information causing the adverse credit decision is incorrect or has been corrected, OR There are extenuating circumstances relating to the adverse credit history. (Note: Endorsers aren't eligible for this option.) If I am declined and decide to document extenuating circumstances, how long will this process take? After you submit your request to document extenuating circumstances, Applicant Services will contact you. Once all documentation has been received, a determination will be made and provided to you within 7-10 business days. How do I begin the process of documenting extenuating circumstances? If you believe there are extenuating circumstances related to the adverse credit information that should be considered in evaluating your eligibility for a Direct PLUS Loan, you may begin the process in one of two ways: 1. Log in to StudentLoans.gov and select "Document Extenuating Circumstances" on the left navigation bar. Follow directions. Applicant Services will contact you with further instructions. 2. Contact Applicant Services between 8:00 AM to 8:00 PM, Eastern Time, Monday through Friday. Applicant Services may be reached toll-free, at 1-800-557-7394. 18

FEDERAL LOAN PROGRAM COMPARISON CHART Federal Loan Programs Perkins Subsidized Unsubsidized PLUS Is the loan based on financial need? Yes Yes No No Who may receive the loan? Undergraduate students with exceptional financial need Undergraduate students with financial need All undergraduate students Parents of undergraduate students What is the current interest rate? 5.0% 4.29% from 7/14/15 through 6/30/16. 4.66% from 7/1/14 through 6/30/15. 4.29% from 7/14/15 through 6/30/16. 4.66% from 7/1/14 through 6/30/15. 6.84% from 7/1/15 through 6/30/16. 7.21% from 7/1/14 through 6/30/15. When does the government pay my interest? In college (while you are enrolled at least half-time) and for 9 months after you graduate or drop below half-time In college (while you are enrolled at least half-time) You pay all interest charged over the course of your loan You pay all interest charged over the course of your loan When do I begin repayment? enrollment 9 months after you graduate or drop below half-time enrollment 6 months after you graduate or drop below half-time enrollment 6 months after you graduate or drop below halftime enrollment Immediately, but you can defer repayment until 6 months after you graduate or drop below half-time enrollment Whose name is the loan in? Student s Student s Student s Parent s Is a credit check performed? No No No Yes 19

What is a Master Promissory Note (MPN)? MASTER PROMISSORY NOTE The MPN is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the Department of Education. It also explains the terms and conditions of your loan(s). There are two types of MPNs in the Direct Loan Program: one for Direct Subsidized/Unsubsidized Loans and one for Direct PLUS Loans. If you are an undergraduate student borrower, you may be required to sign only one MPN for all of your Direct Subsidized Loans and Direct Unsubsidized Loans. If you are a parent borrower whose child is attending a school, you may be required to sign only one MPN for all of your Direct PLUS Loans. You may be able to borrow under this one MPN for all academic years of that child's undergraduate study. Note: Parents must sign an MPN for each child for whom they are borrowing. What if I do not want to complete an MPN electronically? To complete a paper MPN, contact the school's financial aid office. How do I complete an electronic MPN? To complete an electronic MPN: From the StudentLoans.gov home page, click on the "Sign In" button located in the "Manage My Direct Loan" box. The Sign In page will appear. Once signed in, click on Complete Master Promissory Note. Select the type of loan you would like to receive. Follow the instructions to complete, sign, and submit your MPN. What do I do after I have completed a Master Promissory Note? Your school's financial aid office will be notified of the completion and will contact you if further action is needed. Before your loans are disbursed, you will receive a disclosure statement from the Department of Education. To view your submitted Master Promissory Notes (MPN), go to the MyProfile page and select "Completed MPNs" under "My Loan Documents." Will I be able to save my electronic MPN prior to submitting it and return at a later time to complete it? No. You will need to complete the entire electronic MPN process in a single session. If you exit the web site before submitting your signed MPN and return later, you will have to start over from the beginning of the process. 20

What is Direct Loan Entrance Counseling? DIRECT LOAN ENTRANCE COUNSELING A mandatory information session which takes place before you receive a federal student loan that explains your responsibilities and rights as a student borrower. During entrance counseling, you will learn about the following: What a Direct Loan is and how the loan process works Managing your education expenses Other financial resources to consider to help pay for your education Your rights and responsibilities as a borrower Who has to complete entrance counseling? All students taking out Direct Subsidized Loans or Direct Unsubsidized Loans: If you have not previously received a subsidized or unsubsidized loan under the Direct Loan Program Federal Perkins Loan borrowers: If you re going to receive a Perkins Loan, check with the financial aid office at your school to see what requirements you must meet. Parents taking out a Direct PLUS Loan to help pay for their children s education expenses do not have to complete entrance counseling. When do I go through entrance counseling? You must complete entrance counseling before your school can make the first disbursement of your loan. How do I complete entrance counseling? Your school will tell you how to complete your entrance counseling. Your school may require in-person counseling, or you may be able to complete the counseling online. (The school will provide the URL for your counseling if it s available online.) If your school tells you to use www.studentloans.gov to complete entrance counseling, you should expect it to take you about 30 minutes. 21

DIRECT LOAN EXIT COUSELING Exit Counseling Before federal student loan borrowers graduate, withdraw (regardless of plans to transfer to another school), or drop below half-time status they are asked to complete exit loan counseling. Exit counseling has many purposes. It provides an opportunity for the borrower to review their rights and responsibilities and provide their lender(s) with current contact information. During the exit counseling session, the borrower will also select their repayment plan. Exit counseling helps borrowers make wise decisions with regard to repayment of their loans. In order to make this as easy and convenient as possible, borrowers are able to complete this requirement online. How to Complete Your Exit Counseling 1. Go to http://www.nslds.ed.gov/ 2. Click on Exit Counseling 3. Click on the "Start" button under Loan Exit Counseling 4. Read the site navigation and then click next 5. Read the Intro and then click next 6. Read the basics and then click next 7. Type your social security number, last two letters of your last name, date of birth and your FSA ID (this is the same FSA ID you used to sign your FAFSA) 8. Click Submit 9. Complete the entire exit counseling session (upon completion a box will appear indicating Congratulations with your name). Transfer Students Did you know that your financial aid package doesn't automatically transfer to your new college or university? There are a few steps you need to take to ensure that your financial aid is in order: 1. Contact your current school's financial aid department and notify them of your transfer. 2. Contact the Direct Loan Program and notify them of your transfer. Their contact phone number is (800) 848-0979 3. Contact CPN and notify them of your transfer so they can send your FAFSA to your new school 4. Contact your new school's financial aid department and make sure they are looking out for the paperwork coming from your old school. 22

STEP-BY-STEP INSTRUCTIONAL GUIDES STEP-BY-STEP INSTRUCTIONS FOR SIGNING THE MASTER PROMISSORY NOTE FOR DIRECT LOANS 1. Open up a web browser and go to studentloans.gov on the internet and click the green Login button. 2. The site will prompt you to enter your FSA ID. If you don t have an FSA ID you may click Create and FSA ID or if you forgot your FSA ID click Forgot Username or Password. You will be directed to the FSA ID website. 23

3. Before you begin, verify that your personal information is up to date. The personal information displayed is based on the information returned from the Federal Student Aid ID website. If any of the information is incorrect, you must correct it at the Federal Student Aid ID website. 4. Click on Complete a Master Promissory Note. 24

5. Click on the type of Direct Loan you are applying for. For this example, we will click on Subsidized/Unsubsidized 6. Verify that the Borrower Information is correct. This will already be populated for you. 25

7. Under the School Information section, click on the state that your college is located in, and click on your school name. And then press, Continue. 26

8. You must enter two references with the following requirements: o List adults with different U.S. addresses who have known you for at least three years. o The first reference should be a parent or legal guardian. o References must have different addresses and telephone numbers. o If the reference does not have a telephone number, enter N/A. After entering the information for Reference 1 and Reference 2 click on the Continue tab at the bottom of the screen. 27

9. Read sections C through G, and then click in the checkbox acknowledging that you have reviewed all sections. Then click Continue to finalize the process for signing the Master Promissory Note ( MPN ). Congratulations! You have completed the Master Promissory Note. 28

STEP-BY-STEP INSTRUCTIONS FOR COMPLETING ENTRANCE COUNSELING FOR DIRECT LOANS 1. Open up a web browser and go to studentloans.gov on the internet and click the green Login button. 2. The site will prompt you to enter your FSA ID. If you don t have an FSA ID you may click Create and FSA ID or if you forgot your FSA ID click Forgot Username or Password. You will be directed to the FSA ID website. 29

3. Before you begin, verify that your personal information is up to date. The personal information displayed is based on the information returned from the Federal Student Aid ID website. If any of the information is incorrect, you must correct it at the Federal Student Aid ID website. 4. Click on Complete Counseling. 30

5. Click on Entrance Counseling. 6. Select the state that your college is located in and select the name of your college that you will be attending. You will then be required to click "Notify School" once the school is provided. 31

7. In order to complete the correct entrance counseling you must select the Student Type. Click on the circle that says I am completing entrance counseling to receive Direct Loans as an undergraduate student. and click Continue. 8. You will now be required to read information and answer questions to test your knowledge about loans. Scroll down to begin the Entrance Counseling, read each question and provide your answer. Please note, if you answer any of the question incorrectly, it will allow you to re-read the section and answer again. 32

9. Your current loan balance is located at the top of the page and you will be asked to confirm the amount you owe. Answer the question As of today, how much do you owe in student loans? and then click Check Answer. 33

10. Free Money First explains the various types of federal aid. Answer the question Which sources of federal student aid do you have to repay? Once you select the answer, the screen will display if you have answered correctly. 34

11. Type of Federal Student Loans displays the four types of federal loans. Answer the question What is the current interest rate for Direct Unsubsidized Loans received by undergraduate students? and click Check Answer. 35

12. The Loan Limits display loan limits for the Direct Subsidized and Unsubsidized loans for both Dependent and Independent students. Answer, What is the total annual loan limit for a dependent undergraduate student in their 2nd year? and click Check Answer. 36

14. Your School Expense Budget allows you to compare school expenses verses funding. Review your school s expenses and click Apply Expenses. You may click Step 2 to adjust your funding for this year. Enter the amount you expect to receive in funding for this school year. Refer to your student account for your financial aid package awarded by your college. You may also refer to your Student Aid Report (SAR/FAFSA results). This would include any scholarships, grants, work study, federal student loans, or private loans. Answer the questions, What are your total expenses for this year? and How much funding do you have available for this year? Click Check Answer for each question. 37

16. Manage Your Expenses gives you tip on managing your budget. Answer, Which of the following is/are true? 17. Under Manage Loan Disbursements select if the state is true or false. 38

18. Responsible Borrowing gives you tips for borrowing responsibly. The Interest Savings Calculator to see potential savings by paying interest during your grace period. Click on Continue at the bottom of the page. 39

19. Complete the Estimate What You Will Owe and Earn section. Enter your projected loan balance under Step 1 and your monthly income under Step 2. Answer the question Under the Standard Repayment Plan, you generally must pay at least per month for up to years. 40

20. There are several repayment options. Income-Driven Repayment Plans explains a few options for repayment. Answer Under the Income-Based Repayment Plan, your federal student loan payment will be what percentage of your discretionary income? 41

21. Entering Repayment answers questions you may have about repayment. Answer, When do you have to start making payments on your Direct Subsidized and Direct Unsubsidized Loans? 42

22. Navigating Repayment gives additional repayment information. Answer the questions, Who do you contact to select or change your repayment plan? and When must you contact your federal loan servicer? and click Continue. 43

23. Read the Avoiding Default and Trouble Making Payments. Select true or false to the statements, Deferment and forbearance are ways of temporarily postponing your student loan payments question and the If you're having trouble making payments, your loan servicer can help you... 44

24. Delinquency and Default informs you of the consequences for a delinquent or default loan. Complete the statements and answer the question, Some consequences of allowing a federal student loan to default are., How soon after you miss a payment does your loan become delinquent? and Even if I am delinquent on my federal student loans, there are steps I can take to avoid default. 45

25. Plan for the Future gives you tip on planning, saving, and spending. Answer the question, You should save enough in your emergency fund to cover of your normal expenses. 46

26. Your Income & Taxes inform you of tax incentives. Answer the statement, A tax deduction reduces taxable income. 47

27. Your Credit & Identity provides you with tips on establishing and maintain good credit, as well as protecting your credit and identity. Answer the statement, Shredding unnecessary financial documents will help protect you from identity theft. 48

28. Credit Cards & Other Borrowing gives you tips on borrowing other funds. Answer the statements, Missing payments or being late on payments can result in fees and higher interest rates. and Your credit score can significantly impact your ability to borrow and the cost of borrowing. Click Submit Counseling to complete your Entrance Counseling. Congratulations! You have finished your Entrance Counseling for your direct loan. 49

STEP-BY-STEP INSTRUCTIONS FOR COMPLETING APPLICATION FOR DIRECT PLUS LOAN 1. Open up a web browser and go to studentloans.gov on the internet and click the green Login button. 2. The site will prompt you to enter your FSA ID. If you don t have an FSA ID you may click Create and FSA ID or if you forgot your FSA ID click Forgot Username or Password. You will be directed to the FSA ID website. 50

3. Before you begin, verify that your personal information is up to date. The personal information displayed is based on the information returned from the Federal Student Aid ID website. If any of the information is incorrect, you must correct it at the Federal Student Aid ID website. 4. Choose the "Request a Direct PLUS Loan" link to begin. 51

6. Choose your loan type by selecting Parent PLUS. 52

8. Complete student information and your loan preferences. Please note under Credit Balance Options, if you should borrow more than your bill, a credit balance will be created. It is important that you confirm who will be receiving the credit as a refund otherwise it will remain on the student's account. 53

9. Complete the Loan Amount Requested. If you select I would like to specify a loan amount. It is very important that you correctly figure the amount you wish to borrow. You may only borrow up to, but not more than, the cost of attendance minus any financial aid your student is receiving. The Loan Period start and end dates are dates the student s classes are scheduled to begin and end. The dates entered will specify the period you re requesting the PLUS loan. Once the information is entered and verified, click Continue. 54

10. Complete Borrower Information. Most information on this form is prefilled. Complete and verify each field before you click Continue. 55

11. Review your request to confirm everything is correct and click Continue. 56

12. To submit the application you must complete the Certification. You must review the Important Notices by clicking the link Click here to review. You must read and agree to the statement by clicking the two boxes by each statement. To submit you application click Continue. Click to SUBMIT your request. 13. Once you submit your request your confirmation will be displayed on your screen and you will receive an email confirmation. o IF THIS IS THE FIRST TIME YOU RE BORROWING A FEDERAL DIRECT PLUS FOR THIS STUDENT, PLEASE ALSO COMPLETE A MASTER PROMISSORY NOTE. CLICK ON "COMPLETE MPN" and then select "Parent PLUS". o Once the college receives notice that you have completed the federal Direct PLUS process they will originate (or certify) your loan. The U.S. Department of Education will send you a disclosure statement with the details of your loan. You will also receive a confirmation letter from the Financial Aid Office. Once your funds have been disbursed to your student's account, you will receive notice from the Student Accounts Office. o If you do not pass the credit check you should have been prompted on the studentloans.gov website to either obtain an endorser or appeal the credit decision. If you want your child to borrow additional unsubsidized funds instead, you should have your child contact the college s financial aid office to let them know how much additional funds you wish to borrow. First and second year students may borrow up to an additional $4,000 unsubsidized and third and fourth year students may borrow up to an additional $5,000 unsubsidized. 57