Types of Loans Loan Processes and Requirements Repayment
Options
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FEDERAL LOANS Federal Direct Subsidized Loan Federal Direct
Unsubsidized Loan Perkins PLUS GradPlus
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FEDERAL DIRECT SUBSIDIZED LOAN Need-based Loan Origination Fee:
1.051% Grace Period: 6 months Department of Education pays interest
In-School Deferment Student pays interest once repayment begins
Only undergraduate students are eligible Student must be enrolled
at least half time Student must be meeting SAP
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SUBSIDIZED LOAN 150% LIMIT Effective for new Direct Loans for
which the first disbursement is made on or after July 1, 2013,
Direct Subsidized Loan eligibility is limited to a maximum of 150%
of the students current academic program length. This policy is in
addition to, and not in place of, the lifetime aggregate loan
limits currently in place. Click on the Loan Limits link below to
view these lifetime limits.
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Borrowers may receive Direct Subsidized Loans for no more than
150% of the length of the current academic program (ex: 6 years for
a 4 year degree) Once a borrower has received Direct Subsidized
Loans for 150% of the length of their program, the borrowers future
Subsidized Loan eligibility will end. A student who has received
Direct Subsidized Loans for 150% of the length of their program and
continues enrollment beyond that point will lose all subsidies on
previously received Direct Subsidized Loans and would be required
to pay all accumulated interest.
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FEDERAL DIRECT UNSUBSIDIZED LOAN Non-Need based Loan Interest
rate: 3.86% UG, 5.41% Grad Origination Fee: 1.051% Grace period: 6
months Student pays interest Interest is capitalized Student can
choose to pay interest while enrolled Undergraduates and Graduates
are eligible Student must be enrolled at least half time Student
must be meeting SAP
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FEDERAL LOAN LIMITS Dependent Undergraduate Student Subsidized
LoanAdditional Unsubsidized Loan Freshman$3,500$2,000
Sophomore$4,000$2,000 Junior/Senior$5,500$2000 Maximum Total
Debt:$31,000 ($23,000 can be subsidized) Independent Undergraduate
Student Subsidized LoanAdditional Unsubsidized Loan
Freshman$3,500$6,000 Sophomore$4,000$6,000
Junior/Senior$5,500$7,000 Maximum Total Debt:$57,500 ($23,000 can
be subsidized)
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FEDERAL LOAN LIMIT Graduate/Professional Student Unsubsidized
Loan$20,500/academic year Maximum Total Debt$138,500 ($65,500 may
be subsidized)
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PLUS LOAN Parent Loan for Undergraduate Students (PLUS)
Non-need based loan Can borrow up to COA Borrower must be credit
worthy Interest Rate: 6.41% Origination fee: 4.204% If the parent
is denied, the student may receive a Federal Direct Unsubsidized
loan at Independent Undergraduate loan limit
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GRAD PLUS Loan for Graduate Students Non-need based loan
Borrower must be credit worthy Interest Rate: 6.41% Origination
Fee: 4.204% Can borrow up to COA No aggregate limit
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FEDERAL LOAN INTEREST RATES T= Treasury Bill Current 10-year
T-Bill rate= 1.81%
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ALTERNATIVE LOANS Interest rates are usually variable
Origination and repayment fees vary Co-signer typically required
Most require school-certification
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ALTERNATIVE LOANS Possible solution for International Students
SAP Ineligible students Non-degree seeking students Students who
have reached federal loan aggregates
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LOAN PROCESSES AND REQUIREMENTS Entrance Counseling Promissory
Note Exit Counseling
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ENTRANCE COUNSELING First-time borrowers Inform them of their
rights and responsibilities in taking out this loan
www.studentloans.gov
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PROMISSORY NOTE Document signed by borrower, which includes
terms and conditions of the loan disbursements, use, and repayment
Mater Promissory Note Good for ten years Covers multiple loan
periods and varying loan amounts of the same type of loan
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EXIT COUNSELING All borrowers that leave an institution must
complete exit counseling Includes graduating, withdrawing,
transferring, or not returning www.nslds.ed.gov
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LOAN NOTIFICATION The institution is required to notify the
borrower that a loan disbursement has been made, and that the
borrower may reduce or cancel the disbursement
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DIRECT LOAN PRORATION Must occur when: A students academic
program is less than a year in length A student is completing a
period of enrollment that is less than one academic year Standard
proration formula: Amount of direct loan student could have for
grade level 24 x enrolled hours
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LOAN REPAYMENT Single source for all federal loan info
including Borrower info Loan amounts Interest accrued Servicer info
www.nslds.ed.gov
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WAYS TO REPAY Standard Monthly payment remains consistent for
10 years Graduated Monthly payments are lower at first but then
increase every 2 years over the 30 year repayment term
Income-sensitive Monthly payments are based on your monthly gross
income Extended Monthly payments over a 25 year plan
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WAYS TO REPAY, CONTD Income Contingent payments based on annual
calculations and adjusted so as not to cause undue hardship; (25
year forgiveness) Income Based- Monthly payments will not exceed
15% of the amount by which your adjusted gross income exceeds 150%
of the poverty line for your family size. (25 year forgiveness) Pay
As You Earn- Payments based on annual income and family size, not
to exceed 10% of discretionary income. (20 year forgiveness)
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OTHER LOAN TERMS Deferments Forbearance Default Cohort Default
Rate
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DEFERMENT Period of postponing payments Federal government will
pay interest for the borrower with a Subsidized DL Entitlement Some
possible deferment situations: Education Peace Corps/ Military
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FORBEARANCE Temporary cessation, reduction, or extension of
payments Student is responsible for interest that accrues Borrower
is willing but temporarily unable to pay
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DEFAULT Failure to meet the terms of the promissory note
Failure to repay Failure to attend Borrower is considered to be in
default after being delinquent for 270 days Borrower is subject o
wage garnishment, seizure of income tax refunds, lottery winnings,
license non- renewal, sued by DOE Student not eligible for federal
financial aid Damage to the borrowers consumer credit score
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DEFAULT Satisfactory Repayment Arrangements Six on-time
voluntary payments Rehabilitation Nine on-time voluntary payments
Consolidation can fix a defaulted loan
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COHORT DEFAULT RATE Includes DL loans, and loans underlying DL
consolidation loans CDR = % of borrowers who enter repayment in a
given federal fiscal year who then default within the next 3
fiscals years High rate has consequences for schools >15% = loss
of 1 installment/semester >15% = 30 day hold on 1st time, 1st
year borrowers > 40% = loss of participation in Title IV
funding