Private Student Loan
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For more information or to apply for a private student loan, please click here.
About Private Loans
Private loans, also known as alternative loans, can be taken out as a supplement
to federal financial aid. Students who have used up their Pell grant money and taken
out the maximum allotted amount in federal loans may borrow additional funds from
a private lender. Private loans may also be taken out by students who were not awarded
federal aid.
Interest Rates
Private Loan rates rise and fall with the economy and vary from lender to lender.
Each student lender sets their own interest rate and chooses what kind of borrower
benefits their customers will receive. In contrast, federal loans taken out after
July 1, 2006 are fixed at rates determined by the government (currently 7.90%- 8.50%
for PLUS and 6.8% for Stafford Loans). The interest rates on private loans are typically
higher than those on federal loans, but lenders may choose to lower their rates
or increase borrower benefits if they choose to do so.
Borrowing Limits
The amount of money a student may borrow in private loans is usually greater than
the amount that may be borrowed in federal loans. The chosen lender will be able
to tell the student how much money they can borrow. Student federal loan limits
are outlined in the award letter a student receives after submitting a FAFSA. For
the 2007-2008 year, the maximum Stafford Loan money a full-time dependent undergraduate
student may borrow varies between $3,500 and $5,500 annually depending on year in
school. If a student’s parent is eligible to receive a federal PLUS Loan, they may
be able to borrow more.
Choosing a Student Lender
Students who attend schools participating in the Direct Loan Program borrow directly
from the government and will not need to select a student lender. Those who borrow
from schools participating in the federally subsidized FFEL Program and those who
take out private loans (or a combination of the aforementioned) will have to choose
a lender. Schools typically offer preferred lender lists that recommend lenders
to students, but it is best to supplement school advice with personal research.
Many student lenders are available, and they offer varying interest rates, borrower
benefits and repayment guidelines. Schools are required to process loans from the
student’s lender of choice without unreasonable delay, regardless of whether the
lender appears on the school preferred lender list.
Private vs. Federal Loan Repayment
- Private lenders usually require that students begin making payments once the initial
disbursement has been issued. In cases where in-school forbearance is granted, interest
will generally accrue.
- Federal Stafford payments may be deferred until 6 months after graduation. Interest
does not accrue during this time.
- Parents who take out federal PLUS loans must make the first payment within 60 days
after the loan is fully disbursed. Graduate students who take out federal PLUS loans
may defer their loans until graduation, but interest will accrue during this period.
- Private loans usually have to be repaid regardless of situation, including bankruptcy.
- After a certain number of years, some students may be eligible for federal loan
forgiveness.
Apply
For more information or to apply for a private student loan, please click here.
Federal Stafford Student Loan
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For more information or to apply for a Federal Stafford Loan, please click here.
For more information or to apply for a Federal Stafford Loan for Graduate Students, please click here.
About
The Federal Stafford Loan is the most popular low-interest education loan designed for undergraduate
and graduate students. This loan is guaranteed by the federal government and offers
flexible repayment options. Schools that participate in the Federal Family Education
Loan (FFEL) Program or in the William D. Ford Federal Direct Loan (Direct Loan)
Program, or both, offer Stafford Loans.
FFEL Program vs. Direct Loan Program
Schools generally participate in either the FFEL or Direct Loan Program, but some
may participate in both. The eligibility rules and loan amounts are identical under
both programs. Repayment plans, however, differ somewhat.
- FFEL funds will come from a bank, credit union, or other lender that participates
in the program. You will need to choose a lender if you obtain this loan. Schools
that participate in the FFEL Program will usually have a list of preferred lenders.
Borrowers may choose a lender from that list, or choose a different lender they
prefer.
- Direct Loan funds will come directly from the federal government. No lender choices
will need to be made.
Subsidized vs. Unsubsidized Stafford Loans
There are two types of Federal Stafford Loans: subsidized and unsubsidized. Depending
on household income, a student may be eligible for one or both. The school will
specify the loan type for which the student should apply.
- Subsidized Stafford Loans are awarded on the basis of financial need. The government
pays the interest while the student is in school, in deferment (if applicable),
and during the grace period before repayment begins.
- Unsubsidized Stafford Loans are available to all students regardless of income,
though the maximum amount of the loan varies.
If you're a dependent undergraduate student, each year you can borrow up to:
- $3,500 (for the 2007-08 academic year) if you're a first-year student enrolled in
a program of study that is at least a full academic year.
- $4,500 (for the 2007-08 academic year) if you've completed your first year of study
and the remainder of your program is at least a full academic year.
- $5,500 if you've completed two years of study and the remainder of your program
is at least a full academic year.
If you're an independent undergraduate student or a dependent student whose parents
have applied for but were unable to get a PLUS Loan (a parent loan), each year you
can borrow up to:
- $7,500 (for the 2007-08 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.
- $8,500 (for the 2007-08 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.
- $10,500 (for the 2007-08 academic year) if you've completed 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.
- The student is responsible for all interest that accrues while they are in school,
in deferment, and during the grace period. As long as the student doesn’t exceed
yearly Stafford Loan borrowing limits, they may take out both subsidized and unsubsidized
loans.
Borrowing Limits (2007-2008 School Year)
Loan amounts vary depending on a student's year in school and on whether they are
considered a financially dependent or independent student. The school's financial
aid office will determine a student's eligibility for a subsidized or unsubsidized
loan. The amount borrowed may not exceed the yearly cost of attendance minus grants
and other financial aid received.
Grade Level
Freshman
Sophomore
Junior/Senior
Graduate
|
Dependent Student*
$3,500
$4,500
$5,500
n/a
|
Independent Student*
$7,500
$8,500
$10,500
$20,500
|
*The government determines dependent and independent student status. Annual limits
may vary depending on your chosen medical discipline
Interest Rates and Fees
- Interest rates on Stafford loans first disbursed on or after July 1, 2006 are fixed
at 6.8%.
- Stafford loans disbursed between July 1, 1998 and June 30, 2006 may alter from year
to year but cannot exceed 8.25%. For the 2007-2008 school year, the interest rate
is 7.22%. This rate may be lower during grace and deferment periods.
- In addition to interest rates, a loan fee of up to 4% will be charged. It will be
deducted proportionately from each loan disbursement.
Eligibility Requirements
- Enrolled at least half time at an eligible school and maintaining satisfactory academic
progress
- A U.S. citizen or a permanent resident of the U.S. or an eligible territory
- Not currently in default. Must not owe a refund on any Title IV loan or grant
- Registered with Selective Service (if borrower is a male under age 25)
Loan Repayment
- Students will have a 6 month grace period after graduating, leaving school, or dropping
below half-time status. After this time, payments must be made.
- During the grace period, interest will not be charged on subsidized loans but will
be charged on unsubsidized loans.
- Payments are usually due on a monthly basis.
- Under certain circumstances, e.g. health problems, a student may be eligible for
loan deferment.
For more information on Federal Stafford Loans, please visit www.studentaid.ed.gov.
Apply
For more information or to apply for a Federal Stafford Loan, please click here.
For more information or to apply for a Federal Stafford Loan for Graduate Students, please click here.
Federal PLUS Loan
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For more information or to apply for a Federal PLUS Loan, please click here.
About
The Parent Loan for Undergraduate Students or PLUS Loan may be taken out by parents
of dependent undergraduate students and by graduate or professional school students.
It is an affordable, low-interest loan designed to help students and parents pay
for a college education. This is a government loan meaning that it is guaranteed
(or insured) by the federal government. Schools that participate in the Federal
Family Education Loan (FFEL) Program or in the William D. Ford Federal Direct Loan
(Direct Loan) Program offer PLUS Loans.
FFEL Program vs. Direct Loan Program
Schools generally participate in either the FFEL or Direct Loan Program, but some
may participate in both
- FFEL funds will come from a lender. You will need to choose a lender
if you obtain this loan. Schools that participate in the FFEL Program will usually
have a list of preferred lenders. Borrowers may choose a lender from that list,
or choose a different lender they prefer.
- Direct Loan funds will come directly from the federal government.
No lender choices will need to be made.
Borrowing Limits
The maximum amount borrowed may not exceed the total cost of attendance minus any
other financial aid received. If the cost of attendance is $6,000, for example,
and a student receives $4,000 in aid, only $2,000 may be borrowed. The cost of attendance
may include tuition and fees, room and board, books and supplies, transportation,
and miscellaneous educational expenses. The student's school will determine and
certify this amount.
Interest Rates and Fees
- Interest rates on PLUS Loans disbursed on or after July 1, 2006 are fixed at 7.9%
for Direct PLUS Loans and at 8.5% for FFEL PLUS Loans.
- PLUS Loan rates for loans disbursed between July 1, 1998 and June 30, 2006 may alter
from year to year. For the 2007-2008 school year, the interest rate is 8.02% for
both the Direct and FFEL programs.
- Interest is charged on a PLUS Loan from the date of the first disbursement until
the loan is paid in full.
- In addition to interest rate, a loan fee of up to 4% will be charged. It will be
deducted proportionately from each loan disbursement.
Loan Repayment
- For parent borrowers, the first payment is due within 60 days after the loan is
fully disbursed.
- For parent borrowers, there is no grace period. Interest begins to accumulate at
the time the first disbursement is made.
- Graduates and professional school students may request to have their loan deferred
until graduation. Interest will accrue during the deferment period.
Apply
For more information or to apply for a Federal PLUS Loan, please click here.
Student Loan Consolidation
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To apply for a Federal Consolidation Loan, please click here.
About
A Consolidation Loan can simplify the loan repayment process by allowing the borrower
to combine several types of federal student loans and repayment schedules into one.
The repayment process is simplified because only one payment must be made each month.
Often, the interest rate on the Consolidation Loan is lower than what is currently
paid. Even if a borrower is in default
on a federal student loan, they might be eligible for a Consolidation Loan if certain
conditions are met.
Note that a lender may not refuse to consolidate your loans because of
- The number or type of eligible loans the borrower wants to consolidate.
- The type of school attended.
- The interest rate that would be charged on a consolidation loan.
- The types of repayment schedules available.
Loans That May be Consolidated
- Subsidized and Unsubsidized Stafford Loans (both FFEL and Direct)
- Perkins Loans
- PLUS Loans
- Nursing Student Loans (NSL)
- Supplemental Loans for Students (SLS)
- Health Education Assistance Loans (HEAL)
- Health Professions Student Loans (HPSL)
- Loans for Disadvantaged Students (LDS)
Some private lenders also consolidate loans, but these cannot be consolidated with
federals loans. The Loan Origination Center’s Consolidation Department can provide
you with a complete list of loans eligible for Direct Consolidation.
www.loanconsolidation.ed.gov
Consolidation Periods
Federal loans may be consolidated during periods of repayment, grace, deferment,
and forbearance. Loans may not be consolidated while the borrower is still in school.
Advantages vs. Disadvantages of Federal Loan Consolidation
Advantages
- One Monthly Payment
- Lower Monthly Payments
- Longer Repayment Period
- Fixed Interest Rate
Disadvantages
- Greater Total Money Repaid - Interest accrues over a longer period when repayment
period is extended.
- Loss of Borrower Benefits - Borrower may lose cancellation benefits on Perkins Loan.
Interest rate discounts and principal rebates may also be lost.
Interest Rates and Fees
The interest rate for FFEL and Direct Consolidation Loans is set according to a
formula established by federal statute. The fixed rate is based on the weighed average
of the interest rates on the loans at the time the borrower consolidates, rounded
up to the nearest one-eighth of a percent. The interest rate does not exceed 8.25%.
The consolidation rate is fixed for the life of the loan, which protects the borrower
from future increases in variable rate loans but prevents them from benefiting from
future decreases in variable rates. There are no application fees or prepayment
penalties.
Under the FFEL Program, you can receive a Subsidized and/or an Unsubsidized FFEL
Consolidation Loan, depending on the types of loans you’re consolidating. (Federal
PLUS Consolidation Loans are included in the Unsubsidized FFEL Consolidation Loan
category.)
Repayment
- Repayment begins within 60 days of the loan disbursement.
- Payback term ranges from 10-30 years depending on the amount of educational debt
being repaid and on selected repayment options.
- Loans may be repaid in a shorter amount of time is borrower chooses to do so.
- Once consolidated, federal loans may not be unconsolidated.
Apply
To apply for a Federal Consolidation Loan, please click here.