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12 Federal Family Education Loans - Student Loans |
| Federal Family Education Loans Federal Family Education Loans are available to students attending this school. These loans include the federal Stafford Loans, interest subsidized and unsubsidized and Federal Parent Loans (FPLUS) for attendance in undergraduate programs. These loans are guaranteed by state and private nonprofit groups called guaranty agencies. Student Loan Program Guidelines Through these loan programs, loans are usually made available by a local bank, national bank, savings and loan or credit union. The lender approves the loan, withholds a small fee to cover a portion of the first year's interest, and makes the loan to the student to use for educational purposes. Fees may vary from state to state and average about 4%. No repayment of the loan is due while the student remains in school on at least a halftime basis and is making acceptable progress. When the student leaves school-either through graduation or withdrawal-there is a six month grace period before the individual must begin payment on the principal and remaining interest. Starting on the first day after the grace period expires, repayment must be made to the lender at a minimum rate of $50 per month. The interest rate is 4% to 6%, dependent on the financial market place and the Federal Treasury Bill rates. Interest rates may not exceed 8.25%. Eligibility and Alternatives To be eligible for a subsidized (your interest is paid by the U.S. Dept. of Education) Federal Stafford Loan of up to $2,625 per school year, the student's financial need must be evaluated. You must apply for a Federal Pell Grant and submit an institutional Student information Report (ISIR) for the school to evaluate your need. If your program is less than 30 weeks, one academic year, loan amounts may be reduced. The school advisor will tell you of these limits. You may be required to verify your family situation. Students who do not qualify for a Subsidized Federal Stafford Loan, or need funds beyond the $2,625, should speak to our financial aid officer about an Unsubsidized Stafford Loan or Federal Parent Loan (FPLUS). These loans may be at a higher interest rate and may require that you or your parents have a good credit rating. Some lenders may defer repayment on the Federal Unsubsidized loans until you leave school. Stafford Unsubsidized loans may be made in amounts up to $4,000 per school year, while FPLUS loans may be in larger amounts according to parental need and capability to repay. Special Circumstances Students in their second year of school may be eligible for a subsidized loan of up to $3,500 and unsubsidized loan of $4,000. Students attending programs of less than a full academic year may have loan amounts reduced to $1,750 for programs two-thirds of an academic year and $875 for programs one-third of an academic year. Second year loans may also be reduced in a similar manner. Please see the school's Financial Aid Advisor for additional information on these special circumstances. How To Apply For A Loan First be accepted by the school. The school or the lending institution is then permitted to supply you with a loan application The school financial aid officer can provide you with further necessary instruction. Once your application has been completed and the appropriate loan applied for, the school will verify your acceptance and you're on your way. As a part of the application you will be expected to sign a statement that your loan will be used only for educational purposes and also that you are not in default on any student loan or do not owe a repayment on any other Federal financial aid. This will be done as you complete a Free Application for Federal Student Assistance, and receive an SAR or electronic ISIR. If the student is unable to locate a lender, the school may be of assistance. The final application is then taken, or sent, to the lender for processing. Your application is sent by the lender to receive guaranty and final approval. |
How The Money Is Received Federal Loan applications include the promissory note and your loan will be disbursed and mailed to the school in your name. In an effort to prevent students from defaulting on their loans, the U.S. Congress has required that loans to first time borrowers may not be disbursed until students have been in school for at least thirty days. After that, you will receive the first one-half of the loan. Then at the halfway point in your program you will receive the second payment. Students in short programs usually receive one payment. It is important to understand that student loan funds are received and credited to a studen's account before the student has actually earned those funds according to U.S. Dept. Of Ed. Title IV rules. These rules require that a student substantially complete a minimum number of hours before the funds are earned. Therefore, if a student discontinues enrollment prior to completing the program for any reason, the School may be required to return some or all of the funds to the lender. The student would then become liable to the School for any outstanding balance. The Student's Responsibility Having received the loan, your chief responsibilities are to make the most of your education, be in good standing, then, repay the loan. Should your situation change in any way it is your responsibility to inform the lending institution. This means that if you marry, or move, or withdraw from school, or graduate, it is your responsibility to notify the lender. When you immediately notify the lender of your change in status, you will know what to expect and thus protect yourself from future problems. When you leave school you should make sure you understand the repayment arrangements. Make your payments on time. And if possible, try to make "advance payments" along with the required ones. Budget yourself to meet payment dates and to repay the loan as quickly as you can: by making larger pay ments, you will pay a smaller total interest. Efficient repayment of your loan can establish a solid basis for your future credit rating. Failure to repay the loan could be a "dark blot" on your credit rating that would pursue you lifelong. Always remember that a poor credit standing, in this day of computerized information, will follow you wherever you go. How Does Repayment Operate Repayment of the Federal Stafford Loan begins six months after you leave school, and both principal and interest are together repaid at a minimum rate of $50 per month. What would be some typical schedules for repayment of a loan plus simple interest at eight percent a year? Someone borrowing $1,000 might repay $51.19 a month for 21 mos., or $1,074.99. A borrower of $1,500 might repay $55.33 a month for 30 mos., or $1,659.90 total. A borrower of $2,000 might repay $51.59 for 45 mos., or $2,321.55 in all. Someone who takes a $2,500 loan and repays $50.69 per month over 60 mos., will repay $3,041.40 in all. The borrower of $3,000 who pays $52.60 for each of 72 mos., will repay a total of $3,787.20. In most circumstances interest paid on your student loan is tax deductible. |
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