Loan Counseling Presentation
Financing Options Federal Stafford Loans In Student s name Subsidized Unsubsidized Federal Parent Loans for Undergraduate Students (PLUS) In Parent s name Maximum Annual Loan Amount is the Cost of Education less Financial Aid Private / Alternative Loans In Student s name, co-signer option available Maximum Annual Loan Amount is the Cost of Education less Financial Aid 2
Student Loans Eligibility: U.S. citizen or eligible non-citizen; accepted in an approved degree or certificate granting institution; at least half-time enrollment status; males, 18 years and older, must be registered with Selective Service; file a FAFSA, Free Application for Federal Student Aid form. 3
Subsidized Stafford Loan Program Description This is a low interest loan designed to provide students with additional funds for college. Subsidized means the interest on the loan is paid by the federal government while the student is enrolled in school at least half-time. Needs Analysis must be completed by the Financial Aid Office. 4
Unsubsidized Stafford Loan Program Description Unsubsidized means the student is responsible for the interest on the loan while in school, however, payment can be deferred. If deferred, interest will be capitalized once at repayment. Eligible for students that do not demonstrate financial need for all or part of the subsidized loan. Also, students that are independent from their parents or whose parents are denied a PLUS Loan. 5
Stafford Loans Postponement of Payment No payments are due while student is enrolled at least halftime in school. A six month grace period after separation from school or dropping below half-time. Interest of Unsubsidized loan can be postponed while student is in school. 6
Stafford Loan Limits Maximum Annual Amount Freshman: $3,500 dependent students $6,625 independent students Sophomore: Junior: Senior: $4,500 dependent students $7,500 independent students $5,500 dependent students $10,500 independent students $5,500 dependent students $10,500 independent students 7
Stafford Loan Limits Maximum Lifetime Amount $23,000 $46,000 Dependent students Independent students Repayment Terms up to 10 years, unless the student consolidates or utilizes special repayment options. Minimum Monthly Payment is $50 No prepayment penalties 8
Federal Stafford Master Promissory Note (MPN) How Does It Work? Student applies for a loan via the FAFSA & through the financial aid process. Annually, the school determines the student s loan amount eligibility and advises the student through the Award Letter. The school certifies the eligible loan amount. Student completes E-MPN electronically or with a Wet signature. MPN Serial note is open for ten years. 9
Federal Parent Loan for Undergraduate Students (PLUS) Available to an eligible parent of a dependent student. Borrower must be creditworthy or must obtain a creditworthy endorser. Cost of Attendance less Financial Aid. Repayment begins 60 days after the loan is fully disbursed. 10
Parent Loans (PLUS) Loan Forgiven in the event of death or total disability. Interest payments are tax-deductible. Borrower may qualify for a variety of deferment options, including deferments while your student is in school. 11
Interest Rates Stafford Loans - Subsidized & Unsubsidized 6.8% Fixed Rate Parent Loan for Undergraduate Students (PLUS) 8.5% Fixed Rate Undergraduate Subsidized Stafford Loan interest rates gradually decrease from 6.8% in academic year 2007-2008 to 3.4% in academic year 2011-2012 12
Rights and Responsibilities You must contact your lender/servicer when you change your name, telephone number, address or social security number. Inform you lender or servicer when you drop below half time enrollment, withdraw from school or change graduation date. Attend an Entrance and Exit interview. Repay the full amount of your loan, including accrued interest and deducted fees, regardless if you have completed your education. 13
Rights and Responsibilities (continued) If you are having difficulties making your student loan payment, there are options such as deferment, forbearance or and alternate repayment schedule. If you qualify, you may apply for a Deferment (a postponement of principal and interest). Or you may request a Forbearance (postponement of principal, borrower is still responsible for interest, and the interest will accrue). If you fail to repay a loan you may be in DEFAULT. This will be reported to the credit bureau and have ea negative impact on your credit. 14
Reminders for Repayment After the 6 month grace period, the following repayment options are available: Standard: Fixed monthly payment. Max/10 years. Extended: Fixed monthly payment for 12-30 years and is available for students with more than $30,000 of debt. Graduated: Payments start small and increase throughout repayment. Max/10years. Income Sensitive: Payment amount is adjusted annually based on monthly income. 15
Did You Know? Students that make on time payments for the first 3 years, typically satisfy their loan obligation without delinquency. There is no penalty for making payment during your grace period. Paying ahead will decrease the total amount of interest that you pay on your loan and may repay your loan faster. 16
Loan Consolidation Loan consolidation offers both benefits and drawbacks. You should always discuss with your lender whether consolidation is a good alternative for you. Extended Repayment: Offers up to a 30 year repayment schedule (standard is 10). Combined Payment: Make only one payment rather than multiple payments on multiple loans. FFELP, Direct and Perkins Loans can also be combined in the payment. Extra Interest: Loans that are Consolidated may have a higher interest rate. Research options with your lender. Loss of Deferment Eligibility: Certain deferment options are not available with Consolidated Loans. 17