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Graduate Student Loans

If you're like most students, you will probably need some type of student loan to help finance your college education. You should think of a student loan as an investment in your future - as long as you are prepared to meet your repayment responsibilities. All loans, including student loans, represent debts that must be repaid. The good news is that you do not have to start repaying most student loans until after you leave school or graduate.

In addition to delayed repayment, most student loans have relatively low interest rates, several repayment options from which to choose, circumstances under which repayment can be postponed, and other favorable terms and conditions. At Cal U, the federal government funds nearly 95% of all loans. Mandatory online loan counseling helps students understand the responsibilities that come with borrowing money for education. Stafford loan entrance counseling must be completed before loans can be disbursed.  After a student graduates or drops below half time, exit counseling must be completed in order ensure compliance with federal regulations.  Failure to repay your student loans will have serious adverse consequences.

Common Student Loans

Federal Direct Stafford Loan Program

The Federal Direct Stafford Loan is a low-interest education loan designed for both undergraduate and graduate students. Because this is a "government loan," the money you borrow is guaranteed by the federal government. Stafford loans are an extremely popular and cost-effective way to finance your education. More than 50% of all financial aid awarded at California University comes from the Federal Stafford Loan Program.

There are two types of Stafford loans: Subsidized and Unsubsidized. Subsidized loans are offered only to undergraduate students. Depending on your household income, you may be eligible for one or both loans. The type of Federal Stafford Loan that you receive is determined by your FAFSA results.

  • A subsidized Federal Direct Stafford Loan is awarded on the basis of financial need. The government pays the interest while you are in school, during any deferment, and during the grace period before repayment begins.
  • An unsubsidized Federal Direct Stafford Loan is available to all students regardless of income. As the borrower, you are responsible for all interest that accrues while you are in school, while the loan is in deferment, and during the grace period.

Fees and Interest:

  • Interest Rates and Fees for Federal Stafford Loans: The U.S. Department of Education charges fees of 1.072% on these loans until September 30, 2014.  Anything first disbursed on or after October 1, 2014 will be charged an origination fee of 1.073%.
  • The interest rate for federal direct loans are based on the 10-year Treasury Note Index.  For the 2014-2015 award year, the rate for the subsidized and unsubsidized Stafford loans for undergraduate students is 4.66%.  The rate for unsubsidized Stafford loans for graduate students is 6.21%.  These rates are fixed; however, the rates may change for new Stafford loans each year. 

Eligibility Criteria:

  • Aggregate Loan Limits: This is the maximum amount of Federal Stafford Loans that a student can borrow for college.
  • Undergraduate dependent students may borrow a total of $31,000 in Federal Stafford Loans (no more than $23,000 of which can be subsidized).
  • Undergraduate independent students may borrow a total of $57,500 (no more than $23,000 of which can be subsidized).
  • Graduate students may borrow a total of $138,500.
  • In order to be eligible for the Federal Direct Stafford Loan, the student must be enrolled at least half-time (6 credits for undergraduate students and 5 credits for graduate students) in a degree-seeking program.
  • Graduate students must be enrolled at least half-time in graduate level classes in order to be eligible for Stafford loans.  Graduate students are not eligible for financial aid for undergraduate classes.
  • Beginning July 1, 2013, a new time limitation has been placed on direct subsidized loans for first-time borrowers. You may not receive the direct subsidized loans for more than 150% of the published length of your program.  For example, if you are enrolled in a four year bachelor’s degree program you cannot receive your federal direct subsidized loan for more than six years.  If you are a first-time borrower, we encourage you to review the following materials in order to better understand this information: Direct Subsidized Loan Limit.

Application Steps:

Please follow these important steps to apply for a Federal Direct Stafford Loan.

  • Step 1: File your FAFSA on the Web at www.fafsa.gov.   The Financial Aid Office will automatically create a Federal Direct Stafford Loan record for you once we receive your verified FAFSA results.
  • Step 2: The Financial Aid Office will calculate your maximum Stafford Loan eligibility, determine the type of Stafford Loan (subsidized or unsubsidized) and place this amount in your financial aid award. We will calculate your eligibility based on your financial need and grade level.
  • Step 3:  The Financial Aid Office will "originate" your Federal Direct Stafford Loan information with the U.S. Department of Education. Once your loan application has been approved you may sign your Electronic Master Promissory Note (eMPN).
  • Step 4: Please sign your Electronic Master Promissory Note (eMPN) by logging onto StudentLoans.gov and follow the steps outlined.  You will need your Federal Student Aid PIN# to complete this process.  You will also need the names, addresses and telephone numbers of two references with different U.S. addresses who have known you for at least three years.  The first reference is typically a parent or guardian.
  • Step 5: Complete your online Direct Loan Entrance Counseling session by logging in to the Department of Education Loan Counseling site at http://studentloans.gov and selecting "Complete Counseling" in the middle of the page.   Select “Entrance Counseling” and follow the instructions to complete.

 Annual Federal Direct Stafford Loan Limits: Borrowing Charts

  • Base Amount (Subsidized/Unsubsidized)

Grade Level

Credit Hours

Annual Loan Amount

Freshman

0-29

Up to $3,500

Sophomore

30-59

Up to $4,500

Junior/Senior

60 or higher

Up to $5,500

Additional Unsubsidized Federal Direct Stafford Loan (Dependent Students)

Grade Level

Credit Hours

Annual Loan Amount

All Undergraduate Students

n/a

Up to $2,000

Graduate Students

n/a

Up to $20,500

Federal Direct PLUS Loan for Parents

The Federal Direct Parent PLUS Loan is a credit-worthy loan for the parent or legal guardian of a dependent student who has borrowed the maximum amount of Stafford Loan assistance. If you are a dependent student, your parent(s) can request up to your cost of education, less all other financial aid received. A credit check is required to determine eligibility for this loan program. California University of Pennsylvania processes all Parent PLUS Loans through the Federal Direct Loan Program. PLUS loans borrowed by parents wishing to borrow to assist with their child's educational expenses will be processed and funded directly with the US Department of Education

Fees and Interest Rate:

  • The U.S. Department of Education charges fees of 4.288% on these loans. 
  • The interest rate for Direct PLUS is based on the 10-year Treasury Note Index.  For the 2013-14 award year, it is fixed at 6.41%.

Immediate Repayment or In-School Deferment:  

  • Repayment of the PLUS loan begins 60 days after the loan is fully disbursed for an academic year.
  • However, an optional in-school deferment will delay payments on the principal of the PLUS loan until six months after the dependent student ceases to be enrolled at least half-time. To request an in-school deferment, please contact Direct Loan Borrower Services at 1-800-848-0979. Deferment must be requested on an annual basis, and may be requested 14 days after the loan has been disbursed to the student's account. Interest will continue to accrue on this loan during the deferment period.

Application Steps:

  • Step One: Log onto https://studentloans.gov using the borrower’s SSN, DOB, and federal PIN and complete a request for a Direct PLUS Loan. This application will initiate a credit check on the borrower.  The 2014-2015 award year application is available starting in May 2014.
  • Step Two: If the loan is approved, complete your electronic Master Promissory Note (eMPN). This is also done at https://studentloans.gov. You will need your Federal Student Aid PIN to sign the promissory note.
  • Step Three: After the eMPN has been signed, you will also need to complete PLUS loan entrance counseling for graduate or professional students.  This is also done at https://studentloans.gov
  • Step Four (If not approved): If your application is not approved you will be given the option of appealing the decision or re-submitting the application with a credit-worthy endorser. If you elect to use an endorser, you can complete the Endorser Addendum online.
  • IMPORTANT: If the parent borrower is denied the Federal Direct PLUS Loan AND the parent has opted NOT to appeal the adverse credit decision OR seek an endorser, the financial aid office will automatically award the student additional unsubsidized Federal Stafford Loan funds.

Federal Direct PLUS Loan for Graduate Students

The Federal Direct Graduate PLUS Loan is a credit-worthy loan for a graduate student who has borrowed the maximum amount of Stafford Loan assistance. If you are a graduate student, you can request up to your cost of education, less all other financial aid received. A credit check is required to determine eligibility for this loan program.

California University of Pennsylvania processes all Graduate PLUS Loans through the Federal Direct Loan Program. PLUS loans borrowed by graduate students will be processed and funded directly with the US Department of Education.

Fees and Interest:

  • The U.S. Department of Education charges fees of 4.288% on these loans. 
  • The interest rate for Direct PLUS is based on the 10-year Treasury Note Index.  For the 2013-14 award year, it is fixed at 6.41%.

Immediate Repayments or In-School Deferment:

  • Repayment of the PLUS loan begins 60 days after the loan is fully disbursed for an academic year.
  • However, an optional in-school deferment will delay payments on the principal of the PLUS loan until six months after the student ceases to be enrolled at least half-time. To request an in-school deferment, please contact Direct Loan Borrower Services at 1-800-848-0979. Deferment must be requested on an annual basis, and may be requested 14 days after the loan has been disbursed to the student's account.

Application Steps:

  • Step One: Log onto https://studentloans.gov and complete a request for a Direct PLUS Loan. This application will initiate a credit check on the borrower.  .  The 2014-2015 award year application is available starting in May 2014.
  • Step Two: If the loan is approved, complete your electronic Master Promissory Note (eMPN). This is also done at https://studentloans.gov. You will need your Federal Student Aid PIN to sign the promissory note.
  • Step Three: After the eMPN has been signed, you will also need to complete entrance counseling for graduate or professional students.  This is also done at https://studentloans.gov.
  • Step Four (If not approved): If your application is not approved you will be given the option of appealing the decision or re-submitting the application with a credit-worthy endorser. If you elect to use an endorser, you can complete the Endorser Addendum online.

Federal Perkins Loan

The Federal Perkins Loan is a federally funded low-interest loan usually reserved for the neediest students. California University of Pennsylvania is the lender, using funds from the federal government and/or payments collected from previous borrowers. The interest rate on the Perkins Loan is fixed at 5%, and repayment starts nine months after you leave school or graduate.

In order to apply for the Perkins Loan, you must complete the Free Application for Federal Student Aid (FAFSA) or the Renewal FAFSA for the appropriate school year. California University must receive the results of your FAFSA by our first-priority deadline of May 1. You must submit your FAFSA by April 1 to allow time for processing to meet this deadline.

California University usually awards Perkins Loans that range from $1,000 to $2,000 per year. The loan will be disbursed equally between the fall and spring semesters.

If you are awarded a Perkins Loan, you must complete a promissory note and entrance loan counseling online with ECSI.  You will be able to complete, review and even print your promissory note on this site.  https://www.ecsi.net/prom19/

When you graduate or leave school for other reasons, you must complete a Perkins Loan exit interview at Educational Computer Systems Inc.(ECSI), the Perkins Loan servicer. This exit interview will give you more information about your repayment options, deferments, cancellation provisions and more. You will be mailed a Perkins Loan exit interview packet after you apply for graduation. You must complete and return the forms in the packet in order to meet your exit interview requirement. Failure to do so will result in a "hold" being placed on your grades, diploma, etc. If you are leaving school for other reasons, such as transferring to a different school, you should contact the Bursar's Office at 724-938-4431 to make arrangements to complete your Perkins Loan exit interview.

Note: Exit interviews for Perkins Loans must be done through ECSI. The school code for California University of Pennsylvania is 19.

Private Alternative Loans

Before applying for a private or alternative education loan, you may qualify for grants and/or other assistance under Title IV of the Higher Education Act.  Loans under Title IV include the Federal Stafford and the Federal PLUS loan.  These Title IV loans may have terms and conditions that are more favorable than the terms and conditions of private education loans.  The more favorable terms of Federal loans generally include the interest rate, fees, and repayment options such as deferments and forbearances.  In addition, Federal loans may be eligible for loan repayment, loan forgiveness, or discharges due, for example, to total and permanent disability or to death.

All students are strongly encouraged to complete the Free Application for Federal Student Aid (FAFSA) each year.  By completing the FAFSA, you are applying for federal and state aid including Pell grants, Stafford Loans, and other federally funded campus need and/or merit based aid.  Parents of dependent students, as well as Graduate students, may also apply for Parent Plus or Graduate Plus loans.

In addition to the federal student loan programs, there are private, non-need-based loans that you and your parents can use to help pay for educational expenses. Since these loans are not subsidized by the federal government, they usually have a higher interest rate to the borrower and should only be considered as a last resort after all other financial aid options have been explored.

A private alternative loan is typically issued in the student's name and most often requires a credit worthy cosigner, who is a US citizen or permanent resident.  Maximum loan amounts, loan terms, borrower qualification, repayment schedules, and interest rates vary among lenders.  Repayment of principal and interest may be deferred in most cases.  Having a credit worthy co-signer will likely reduce the cost of the loan (interest rate, up-front and back-end fees, etc.)  Be aware that the co-signer is fully responsible for repaying the loan should the borrower stop making payments. There are some alternative loan products that offer a co-signer release option after a specified number of on-time payments are made and the borrower is credit-worthy.

Private Alternative Loan Considerations

  • Apply with a credit worthy cosigner- Applying with a cosigner may provide you with an increased chance of approval and more competitive rates.
  • Borrow only what you need to meet your educational costs.
  • Do your research.  Ask questions of your lender and find out which loan will benefit you the most.
  • Be aware of interest rates, fees, and repayment terms before completing the application and promissory note.
  • Monitor your total indebtedness to be sure you will be able to repay with interest.
  • Cosigners are equally responsible for repayment of the loan and their credit is equally affected.

As part of the application process, students will be required to complete the Private Education Loan Applicant Self-Certification Form available through their lender's website.  Students may also download and print a copy of the form online.  Information needed to complete this form, such as cost of attendance and estimated financial assistance may be obtained via the Vulcan Information Portal.

Per  HEOA regulations, lenders are required to provide borrowers with a three business day right-to-cancel period after the final disclosure of a private student loan.  In addition, lenders are required to add an additional three business days for a borrower to receive the final disclosure.  In most cases the disbursement process, which in itself may be another three day process, will begin on the eighth day.  Borrowers should keep this timeline in mind if they are planning to use loan proceeds for other educational purposes.

You have the right to select the alternative lender of your choice.  We have developed a list of participating Alternative/Private Education loan lenders for students who would like guidance in selecting loans.  The list of lenders used by California University of PA students.  Neither California University nor the Financial Aid Office intends any specific endorsement, recommendation, or promotion of these products by including lenders on this list.  We encourage you to compare borrower benefits offered by any participating lender before deciding which lender to use.  An alternative loan is an agreement between the borrower, co-signer (if any) and the lender.  California University of PA cannot be held liable if the borrower is dissatisfied with the interest rates, other terms and/or service provided by the lender.

Below in an alphabetically arranged, comprehensive list of Alternative loan products that California University of PA students have utilized within the past three years.  If you plan to apply for any alternative loan, please be sure to contact the lender directly.  California University of PA and the Financial Aid Office do not endorse, promote, or recommend any of the loan products listed and their inclusion on this page is strictly informational.

Borrowers are encouraged to review the terms and conditions of each program prior to selecting a lender.  You are not required to borrow from one of the loan programs listed below.  Your choice of a lender other than those listed will not result in the denial or a delay of processing.  Upon application, the lender of your choice will forward a certification request to the Financial Aid Office.

Citizen's Bank Trufit Student Loan
Interest Rate Disclosure Information
1.800.708.6684

Credit Union Student Choice - lenders are credit unions nationwide and membership is required.  Contact and Interest Rate disclosure information are available at the lender's site.

Credit Union Student Loans - lenders are credit unions nationwide and membership is required.  Contact and Interest Rate disclosure information are available at the lender's site.
Sample Interest Rate Disclosure

Discover Student Loans
Interest Rate Disclosure Information - Undergraduate Fixed
Interest Rate Disclosure Information - Undergraduate Variable
Interest Rate Disclosure Information - Graduate Fixed
Interest Rate Disclosure Information - Graduate Variable

1.800.STUDENT

MCS Bank
iHELP Private Loan Interest Rate Disclosure
1.800.645.7404

New Jersey Class Loan - This is for students who are residents of New Jersey.
1.800.792.8670
(If you are a resident of a different state, contact your home state higher education agency to see if it offers a private alternative loan option.)

PNC Bank
Interest Rate Disclosure Information
1.800.762.1001

Smart Option Lenders
(Partners include Dollar Bank, Fifth Third Bank, M&T Bank, Regions Bank, Sallie Mae, Commerce Bank , Erie Federal Credit Union Pennsylvania State Employees Federal Credit Union, and State Employees Credit Union of Maryland)
Interest Rate Disclosure Information

SunTrust
Interest Rate Disclosure Information
1.866.232.3889

Union Federal
Interest Rate Disclosure Information
1.866.513.8445

Wells Fargo
Interest Rate Disclosure Information
1.800.658.3567

California University of PA adheres to the Financial Aid Code of Conduct based on the Higher Education Opportunity Act of 2008.

Entrance/Exit Counseling and MPN

Entrance Counseling

Stafford Entrance Counseling (undergraduate students)

  • Sign into http://studentloans.gov using student’s SSN, DOB, and federal PIN
  • Select Complete Counseling
  • In Entrance Counseling section, click Start
  • Select the bullet for “I am completing entrance counseling to receive Direct Loans as an undergraduate student.
  • Follow the instructions on the screen to complete Entrance Counseling

Parent PLUS Entrance Counseling

  • Sign into http://studentloans.gov using student’s SSN, DOB, and federal PIN
  • Select Complete Counseling
  • In Entrance Counseling section, click Start
  • Select the bullet for “I am completing entrance counseling to receive Direct Loans as a graduate or professional student”
  • Follow the instructions on the screen to complete Entrance Counseling

Graduate PLUS/Stafford Entrance Counseling (graduate students) 

  • Sign into http://studentloans.gov using student’s SSN, DOB, and federal PIN
  • Select Complete Counseling
  • In Entrance Counseling section, click Start
  • Select the bullet for “I am completing entrance counseling to receive Direct Loans as a graduate or professional student”
  • Follow the instructions on the screen to complete Entrance Counseling

Perkins Entrance Counseling/MPN

  • Go to https://www.ecsi.net/prom19/
  • Read the information and select Get Started
  • Sign in using student’s SSN, last name, DOB
  • Enter your federal PIN when requested for authentication
  • Most pages require that you accept the terms by checking a box at the bottom
  • Provide complete reference information for yourself, next of kin, and two additional references
  • Read the MPN completely and electronically sign it at the bottom of the page with your full legal name.  This also includes a check box.

Master Promissory Note (MPN)

Stafford MPN

  • Sign into http://studentloans.gov using student’s SSN, DOB, and federal PIN
  • Select Complete Master Promissory Note
  • Select Subsidized/Unsubsidized
  • Follow the instructions on the screen to complete the MPN

Parent PLUS MPN

  • Sign into http://studentloans.gov using borrower’s SSN, DOB, and federal PIN
  • Select Complete Master Promissory Note
  • Select Parent PLUS
  • Follow the instructions on the screen to complete the MPN

Graduate PLUS MPN

  • Sign into http://studentloans.gov using student’s SSN, DOB, and federal PIN
  • Select Complete Master Promissory Note
  • Select Graduate PLUS
  • Follow the instructions on the screen to complete the MPN

Perkins Entrance Counseling/MPN

  • Go to https://www.ecsi.net/prom19/
  • Read the information and select Get Started
  • Sign in using student’s SSN, last name, DOB
  • Enter your federal PIN when requested for authentication
  • Most pages require that you accept the terms by checking a box at the bottom
  • Provide complete reference information for yourself, next of kin, and two additional references
  • Read the MPN completely and electronically sign it at the bottom of the page with your full legal name.  This also includes a check box.

Exit Counseling

California University of PA uses online loan exit counseling through the Department of Education websites.  At the end of each term, borrowers who are not returning the next term will be notified to complete loan exit counseling online.  Exit counseling is required for Stafford or Perkins loan student borrowers graduating, leaving school, or dropping below half-time enrollment. 

General Federal Loan Information & Repayment Options

Aggregate Federal Loan Limit

This is the maximum amount of Federal Stafford Loans that a student can borrow for college.

Undergraduate Dependent students may borrow a total of $31,000 in Federal Stafford Loans (no more than $23,000 of which can be subsidized).

Undergraduate Independent students may borrow a total of $57,500 (no more than $23,000 of which can be subsidized).

Graduate students may borrow a total of $138,500.

Enrollment Verification/In School Loan Deferment

Most lenders and servicers allow students to defer their loan payments while they are enrolled in school at least half time (6 credits for undergraduate students or 5 credits for graduate students).  In most cases, students are required to provide proof of enrollment in order to be granted deferment. 

Below are the steps to request enrollment verification:

  1. Log onto your VIP account at https://vip.calu.edu/.
  2. Click on the Academic Info tab. 
  3. Go to the Clearinghouse Self-Service section on the bottom left and click the National Student Clearinghouse logo. 
  4. This will open a new window to the National Student Clearinghouse.  There you can obtain an enrollment certificate; view your enrollment information on file with the Clearinghouse; and view student loan deferment notifications already made by the Clearinghouse to your lenders, among other options.

For additional information contact the Office of Academic Records: http://www.calu.edu/current-students/records/index.htm.

Announcement: http://www.calu.edu/news/announcements/view.asp?ID=6262.

Federal Direct Loan Interest Rates

Interest rates will be established each year for federal Direct Subsidized, Direct Unsubsidized, and Direct Plus Loans for which the first disbursement is on or after July 1 through the following June 30.  The rate will be the sum of a uniform "index rate" plus an "add-on" that varies depending on the type of loan (Subsidized/Unsubsidized or PLUS) and the borrower's grade level (undergraduate or graduate/professional.)  Thus, interest rates will be the same for Direct Subsidized Loans and Direct Unsubsidized Loans taken out by an undergraduate student, with a different rate for Direct Unsubsidized Loans taken out by a graduate/professional student and for PLUS Loans taken out by parent borrowers or graduate /professional student borrowers.

Under the law, the index rate is determined each year as the "high yield of the 10-year treasury note" auctioned at the final auction held prior to the June 1 preceding the July 1 of the year for which the rate will be effective, plus a statutorily defined "add-on."  As noted, the add-on will differ depending on the type of loan and the student's grade level.  Each loan type also has a maximum interest rate (or cap.)

The interest rate for a loan, once established, will apply for the life of the loan - that is, the loan will be a fixed-rate loan.  As a result, it is likely that many borrowers will have a set of fixed-rate loans, each with a different interest rate, including the 3.4% and/or 6.8% Direct Subsidized and Direct Unsubsudized loans made prior to July 1, 2013.

Federal Direct Loan 150% Eligibility

Beginning July 1, 2013, A new time limitation has been placed on direct subsidized loans for first-time borrowers. You may not receive the direct subsidized loans for more than 150% of the published length of your program.  For example, if you are enrolled in a four year bachelor’s degree program you cannot receive your federal direct subsidized loan for more than six years.  If you are a first-time borrower, we encourage you to review the following materials in order to better understand this information: Direct Subsidized Loan Limit.

Federal Loan Grade Level & Limits

Annual Federal Direct Stafford Loan Limits

Borrowing Charts

Base Amount (Subsidized/Unsubsidized)

Grade LevelCredit HoursAnnual Loan Amount

Freshman

0-29

Up to $3,500
Sophomore

30-59

Up to $4,500
Junior/Senior

60 or higher

Up to $5,500

Additional Unsubsidized Federal Direct Stafford Loan

Grade LevelCredit HoursAnnual Loan Amount

All Undergraduate Students

n/a

Up to $2,000
Graduate Students

n/a

Up to $20,500

Additional Unsubsidized Federal Direct Stafford Loan

(Parents of Dependent Students Denied PLUS Loan)

Grade Level
Credit HoursAdditional Unsubsidized Loan
(Parent PLUS Denial)

Freshman/Sophomore                    

n/a

Up to $4,000
Junior/Senior

n/a

Up to $5,000

Please note- Federal Direct Stafford Loan Base Amount*- can be subsidized and/or unsubsidized

Federal Loan Proration

Federal Stafford loans must be prorated for undergraduate students if the student’s remaining period of study is shorter than an academic year.  For example, Cal U’s academic year is considered fall and spring.  If a student is only enrolled for the fall semester because he or she is graduating, the Stafford loans must be prorated.  Proration is based on the number of credits the student is enrolled in and the number of credits in a full academic year.

 

National Student Loan Data System (NSLDS)

The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s central database for student aid.  It contains information regarding each student’s federal loans and grants.   Students can use NSLDS to determine the total amount of federal aid disbursed at every college or university, as well as the current status and lender for each federal loan.   

To access your NSLDS information, visit www.nslds.ed.gov.  Click “Financial Aid Review” and read and accept the privacy policy.  You will then be taken to the login page, where you will be required to enter your SSN, date of birth, and PIN.

 

Public Service Loan Forgiveness Program

Some students may be eligible to have their loans forgiven under the Public Service Loan Forgiveness Program.  Under this program, borrowers may qualify for forgiveness of the remaining balance of their direct loans after they have made 120 on-time, full, scheduled, monthly payments on those loans while employed full time by certain public employers.  It is recommended that the borrowers use the Income-Based Repayment Plan, the Pay As You Earn Repayment Plan, or the Income-Contingent Repayment Plan to maximize forgiveness.  Only federal direct Stafford loans, or FFEL and Perkins loans that are consolidated into a direct consolidation loan, are eligible for loan forgiveness programs.

Student Federal Loan Consolidation

Consolidation Loans combine several student or parent loans into one bigger loan from a single lender, which is then used to pay off the balances on the other loans. It is very similar to refinancing a mortgage. Consolidation loans are available for most federal loans, including Stafford and Perkins loans. Some lenders offer private consolidation loans for private education loans as well.

Interest Rates

The interest rate on a consolidation loan is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8 of a percent.  There is no longer a cap on consolidation loan interest rates.

If there is any accrued but unpaid interest on a loan, such as interest that was deferred during the in-school and grace periods or during an economic hardship deferment, this interest will be capitalized (added to the loan balance) when the borrower consolidates the loans. The direct loan program capitalizes interest at loan status changes, such as when a loan enters repayment or is consolidated.

No Cost to Consolidate

Aside from a slight increase in the interest rate on the consolidation loan, there is never a cost to consolidate your loans.

Who Can Consolidate

Both student and parent borrowers can consolidate their education loans. (Students and parents cannot combine their loans through consolidation, since only loans from the same borrower can be consolidated. But they can consolidate their loans separately.)

Students can consolidate their education loans only during the grace period or after the loans enter repayment. (Loans that are in default but with satisfactory repayment arrangements may also be consolidated.) Students can no longer consolidate while they are still in school.

Parents, however, can consolidate PLUS loans at any time.

Which Loans Can be Consolidated?

You can consolidate a consolidation loan only once. In order to reconsolidate an existing consolidation loan, you must add loans that were not previously on the loan. You can also combine two consolidation loans together.

When to Avoid Consolidation

Borrowers who have several loans with different interest rates may want to avoid consolidating their loans. Keeping the loans separate allows the borrower to target the highest interest rate loan for accelerated repayment by making extra payments on this loan. Doing so reduces the average interest rate on the set of loans, saving the borrower some money.

Apply for Consolidation

Interested students/parents can apply for loan consolidation here.

Student Federal Loan Default & Negative Consequences

What is Default?

To default means you failed to make your payments on your student loan as scheduled according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan.

If I don’t make my loan payments, when is my loan considered to be in default?

If you repay your loan

  • Monthly, default occurs when you fail to make a payment for 270 days.
  • Less than once a month, default occurs when you fail to make a payment for 330 days (this applies only to FFEL Program loans).

What are the Consequences of Default?

  1. The entire unpaid balance of your loan and any interest is immediately due and payable.
  2. You lose eligibility for deferment, forbearance, and repayment plans.
  3. You lose eligibility for additional federal student aid.
  4. Your loan account is assigned to a collection agency.
  5. The loan will be reported as delinquent to credit bureaus, damaging your credit rating.
  6. Your federal and state taxes may be withheld through a tax offset. This means that the Internal Revenue Service can take your federal and state tax refund to collect any of your defaulted student loan debt.
  7. Your student loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney’s fees, and any other costs associated with the collection process.
  8. Your employer (at the request of the federal government) can withhold money from your pay and send the money to the government. This process is called wage garnishment.
  9. The loan holder can take legal action against you, and you may not be able to purchase or sell assets such as real estate.
  10. Federal employees face the possibility of having 15% of their disposable pay offset by their employer toward repayment of their loan through Federal Salary Offset.
  11.  It will take years to reestablish your credit and recover from default.

What Should I Do Now?

If you have defaulted on any of your federal student loans, take the following steps:

  1. Contact the agency that is billing you.
  2. Explain your situation fully.
  3. Ask them what options are available to get out of default.
  4. Ask them to work with you.
  • Always stay in touch with your lender, loan servicer, or collection agency.

Student Federal Loan Deferment Options

Deferments

A deferment is a postponement of payment on a loan, during which interest does not accrue if the loan is subsidized. (Please note: interest will continue to accrue on an unsubsidized or PLUS loan while in deferment.)

You may qualify for a deferment while you are:

  • Enrolled at least half time in an eligible postsecondary school or studying full time in a graduate fellowship program or an approved disability rehabilitation program.
  • Unemployed or meet the rules for economic hardship (limited to 3 years).
  • You may also be eligible for a deferment based on qualifying active duty service in the U.S. Armed Forces or National Guard.

In most cases, you need to submit a deferment request to your loan servicer along with documentation of your eligibility for the deferment.

If you've gone back to school and your loan servicer receives enrollment information that shows you're enrolled at least half time, it will automatically put your loans into deferment and notify you. You have the option of cancelling the deferment and continuing to make payments on your loan.

 If you are in default on your loan, you are not eligible for a deferment or forbearance.

How Do I Request a Deferment?

Your deferment request should be submitted to the organization to which you make your loan payments.

  • Direct Loans and FFEL Program loans: contact your loan servicer
  • Perkins Loans: contact the school you were attending when you received the loan

Student Federal Loan Forbearance Options

Forbearance

If you can't make your scheduled loan payments, but don't qualify for a deferment, we may be able to give you a forbearance. Forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments.

Some common reasons for getting forbearance are

  • Illness
  • Financial hardship
  • Serving in a medical or dental internship or residency.

See your copy of the Borrower's Rights and Responsibilities Statement for more examples. You can also get more information by contacting your loan servicer.

How Do I Request Forbearance?

Receiving loan forbearance is not automatic. You must apply by making a request to your loan servicer. In some cases, you must provide documentation to support your request.

Student Federal Loan Grace Period

A grace period is defined as an allotted amount of time during which you are not expected to make payments on your student loans after initially leaving school or dropping below half-time status. The two most common types of student loans that offer a grace period are the Federal Stafford Loan and the Federal Perkins Loan.

Three Things to Do During Your Grace Period

Federal Stafford Loan Grace Period

 All Stafford Loans have a six-month grace period. If you allow your six-month grace period to elapse after leaving school, your Stafford Loan will not be eligible to receive a new grace period. However, if you interrupt your initial grace period by going back to school, enroll in enough units to maintain at least half-time status and file the appropriate form, you will be allotted another six-month grace period.

Federal Perkins Loan Grace Period

Upon leaving school your Federal Perkins Loan has a nine-month grace period. If you interrupt that grace period by going back to school, enroll and maintain at least half-time status and fill out the appropriate form, you will be allotted another nine-month grace period. Another benefit of the Federal Perkins Loan is that every time you qualify for deferment, regardless of the type you receive (student, economic hardship, unemployment, etc.), you will always be granted a minimum six-month grace period following the end of the deferment.

Is there a grace period following forbearance?

Forbearance means a temporary interruption of payment due to the inability to pay. Neither Stafford nor Perkins Loans receive a grace period following forbearance.

How do I find out how long my loan’s grace period is?

You can find out how long the grace period is on any loan by doing the following:

STEP 1: Read your loan promissory note. Among the terms and conditions listed in the note you will find details concerning the grace period associated with your loan.

STEP 2: Contact the holder of your loan promissory note. The holder of your promissory note, known as the lender, will be able to provide you with this information.

When is my first payment due?

Stafford Loans are on a monthly billing cycle. The first payment on your Stafford Loan will be due the very next month that follows the conclusion of your six-month grace period. For example, if your grace period ends in the month of December, your first payment will be due in January.

Federal Perkins Loans are on a quarterly billing cycle. After your nine-month grace period expires, the billing cycle starts and interest begins accruing. You will not be expected to make that first payment until the end of the first quarter of the billing cycle. For example, if your grace period ends in December, your first payment will be due in March.

Student Federal Loan Repayment Options

Overview of Direct Loan and FFEL Program Repayment Plans (from http://studentaid.gov)

Repayment Plan

Eligible Loans

Monthly Payment  & Time Frame

Quick Comparison

Standard Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • Payments are a fixed amount of at least $50 per month.
  • Up to 10 years
  • You'll pay less interest for your loan over time under this plan than you would under other plans.

Graduated Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • Payments are lower at first and then increase, usually every two years.
  • Up to 10 years
  • You'll pay more for your loan over time than under the 10-year standard plan.

Extended Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans
  • Payments may be fixed or graduated.
  • Up to 25 years
  • Your monthly payments would be lower than the 10-year standard plan.
  • If you are a Direct Loan borrower, you must have more than $30,000 in outstanding Direct Loans. FFEL borrower, you must have more than $30,000 in outstanding FFEL Program loans.
  • For example, if you have $35,000 in outstanding FFEL Program loans, and $10,000 in Direct Loans, you can use the extended repayment plan for your FFEL Program loans, but not for your Direct Loans. For both programs, you must also be a new borrower as of Oct. 7, 1998. You'll pay more for your loan over time than under the 10-year standard plan.

Income-Based Repayment Plan (IBR)

  • Direct Subsidized and Unsubsidized Loans
  • Subsidized and Unsubsidized Federal Stafford Loans
  • all PLUS loans made to students
  • Consolidation Loans (Direct or FFEL) that do not include Direct or FFEL PLUS loans made to parents
  • Your maximum monthly payments will be 15 percent of discretionary income, the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence (other conditions apply).
  • Your payments change as your income changes.
  • Up to 25 years
  • You must have a partial financial hardship.
  • Your monthly payments will be lower than payments under the 10-year standard plan.
  • You'll pay more for your loan over time than you would under the 10-year standard plan.
  • If you have not repaid your loan in full after making the equivalent of 25 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven.
  • You may have to pay income tax on any amount that is forgiven.

Pay As You Earn Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS loans made to students
  • Direct Consolidation Loans that do not include (Direct or FFEL) PLUS loans made to parents
  • Your maximum monthly payments will be 10 percent of discretionary income, the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence (other conditions apply).
  • Your payments change as your income changes.
  • Up to 20 years
  • You must be a new borrower on or after Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011.
  • You must have a partial financial hardship.
  • Your monthly payments will be lower than payments under the 10-year standard plan.
  • You'll pay more for your loan over time than you would under the 10-year standard plan.
  • If you have not repaid your loan in full after you made the equivalent of 20 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven.
  • You may have to pay income tax on any amount that is forgiven.

Income-Contingent Repayment Plan

  • Direct Subsidized and Unsubsidized Loans
  • Direct PLUS Loans made to students
  • Direct Consolidation Loans
  • Payments are calculated each year and are based on your adjusted gross income, family size, and the total amount of your Direct Loans.
  • Your payments change as your income changes.
  • Up to 25 years
  • You'll pay more for your loan over time than under the 10-year standard plan.
  • If you do not repay your loan after making the equivalent of 25 years of qualifying monthly payments, the unpaid portion will be forgiven.
  • You may have to pay income tax on the amount that is forgiven.

Income-Sensitive Repayment Plan

  • Subsidized and Unsubsidized Federal Stafford Loans
  • FFEL PLUS Loans
  • FFEL Consolidation Loans
  • Your monthly payment is based on annual income.
  • Your payments change as your income changes.
  • Up to 10 years
  • You'll pay more for your loan over time than you would under the 10-year standard plan.
  • Each lender's formula for determining the monthly payment amount under this plan can vary.

Student Loan Comparison Chart

Subsidized Stafford

Unsubsidized Stafford

Parent PLUS

Graduate PLUS

Perkins

Alternative (Private)

Loan Description

Federal student loan in student’s name.  No credit check required.  No interest accrued while enrolled half time. 

Federal student loan in student’s name.  No credit check required.  Interest accrues while enrolled.

Federal loan in parent’s name for dependent undergraduate students.  Credit check required.

Federal loan in graduate student’s name.  Credit check required.

Federal student loan in student’s name.  Based on need and availability of funds. 

Private student loan in student’s name borrowed from a bank or credit union.  Credit check and co-signer required.

Interest Rate

Before 7/1/13 3.4%

7/1/13-6/30/14 3.86%

Before 7/1/13 6.8%

7/1/13-6/30/14 3.86% UG

7/1/13-6/30/14 5.41% GR

6.41%

6.41%

5%

Can have variable interest rates, some greater than 18%.  Varies by lender.

Origination Fees

Before 7/1/13 - 1%

After 7/1/13 - 1.051%

Before 7/1/13 - 1%

After 7/1/13 - 1.051%

Before 7/1/13 - 4%

After 7/1/13 - 4.204%

Before 7/1/13 - 4%

After 7/1/13 - 4.204%

N/A

N/A

Annual Loan Limits

UG up to $5500

Grad not eligible

UG up to $12,500

Grad up to $20,500

Up to student’s COA less other aid

Up to student’s COA less other aid

Undergrad up to $5500

Grad up to $8000

Up to student’s COA less other aid

Aggregate Loan Limits

Undergrad $23,000

Grad $65,000

Undergrad $31,000

Grad $138,500

N/A

N/A

UG up to $27,500

Grad up to $60,000

N/A

Repayment Rules

Begins 6 months after student graduates, withdraws, or drops enrollment to below half-time.

Begins 6 months after student graduates, withdraws, or drops enrollment to below half-time.

Begins 60 days after loan is fully disbursed.  But principal may be deferred like Stafford loans.

Begins 60 days after loan is fully disbursed.  But may be deferred like Stafford loans.

Begins 9 months after student graduates, withdraws, or drops below half-time.

Varies by lender.  Usually begins while in school, but may be able to defer.

Student Loan Return Notice

Students have the right to return all or a portion of their student loans after disbursement. 

  • If you receive a refund check that you do not need to use for educational expenses, we encourage you to return it on your loans in order to reduce payments later.  You can do this by sending your voided refund check or a personal check to the Financial Aid office, along with a request to return a specified amount of your loans to the lender. 
  • You can make your request via your disbursement notification letter that was sent to you by the Bursar’s office or you can use the Student Loan Adjustment Form
  • Loans can be returned by the Financial Aid Office up to 120 days after the date of disbursement.
  • In some instances, students are responsible for the interest accurred between the loan disbursement date and the date of the loan cancellation. Be sure to check with your loan servicer or lender to confirm and understand any interest charges.

Student Loan Servicers

Who is my Loan Servicer?

Visit the National Student Loan Data System (NSLDS) to view information about all of the federal student loans you have received and to find contact information for the loan servicer or lender for your loans. You will need your Federal Student Aid PIN to access your information.

The following are loan servicers for federally held loans made through the William D. Ford Federal Direct Loan (Direct Loan) Program and the Federal Family Education Loan (FFEL) Program.

Aspire Resources Inc.

1-855-475-3335

CornerStone

1-800-663-1662

COSTEP

1-877-292-8639

Direct Loan Servicing Center (ACS)

1-800-848-0979

EDGEucation Loans

1-877-292-7470

EdManage

1-855-479-0490

ESA/Edfinancial

1-855-337-6884

FedLoan Servicing (PHEAA)

1-800-699-2908

Granite State – GSMR

1-888-556-0022

Great Lakes Educational Loan Services, Inc.

 

1-800-236-4300

KSA Servicing

1-877-292-4825

MOHELA

1-888-866-4352

Nelnet

1-888-486-4722

OSLA Servicing

1-866-264-9762

Sallie Mae

1-800-722-1300

VSAC Federal Loans

1-888-932-5626

If you have other types of federal student loans, here’s how to contact for repayment information.

Federal Perkins Loans — Contact the school where you received your Federal Perkins Loan for details about repaying your loan. Your school may be the servicer for your loan.

Privately owned Program loans — Contact your lender for details about repayment options and tools for your loans that are not owned by the U.S. Department of Education

Learn More

Apply for Aid

Glossary of financial aid terms

Application Process for Federal Stafford Loans

Code of Conduct

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