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Federal Family Education Loan Program (FFELP) Largest source of long-term, low-interest
loans for undergraduate, graduate and professional students, and parents of dependent students
Subsidized Stafford Loan Unsubsidized Stafford Loan Parental Loans for Undergraduate Students
(PLUS) Consolidation Loans
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Subsidized Stafford Loan Loan is need-based Student must be enrolled at least half-
time Federal government pays all interest
while: Borrower is in school During the grace period During periods of deferment
Interest rate is variable, capped at 8.25% Repayment begins 6 months after leaving
school 10 year repayment period
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Unsubsidized Stafford Loan Loan is not need-based Loan may replace all or part of the
student’s EFC Must have completed the FAFSA Student must be enrolled at least half-
time Borrower is responsible for interest at all
times Interest rate is variable, capped at 8.25% Repayment begins 6 months after leaving
school 10 year repayment period
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Plus Loans
Parent may borrow up to the Cost of Attendance less other financial aid received by the student
Must not have an adverse credit history Interest rate is annually variable, capped
at 9% Repayment begins 60 days after the loan
is fully disbursed Borrower has 10 years to repay Borrower must be the parent of a
dependent undergraduate student
Loan Limits
Dependent Undergraduate StudentsBorrower’s Academic Level Combined Subsidized & Unsubsidized
Freshman $3,500
Sophomore $4,500
Remaining Undergraduate $5,500
Independent Students or Dependent Students Whose Parents Are Denied Plus Loans
Borrower’s Academic Level Subsidized Unsubsidized Total
Freshman $3,500 $4,000 $7,500
Sophomore $4,500 $4,000 $8,500
Remaining Undergraduate $5,500 $5,000 $10,500
Graduate or Professional $8,500 $10,000 $18,500
Loan Limits
Total Cumulative Loan Limits
Dependent Student $23,000
Independent Undergraduate $46,000
Graduate Student $138,000
PLUS Loans No Federal Limit
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Players in the Game School
Your school must certify your eligibility to receive a student loan
Lender A lender provides funds up to the amount
approved by the school You may select any participating lender
Servicer A lender may contract with a servicer to
administer your loan The servicer may be responsible for
disbursement, processing of payments, deferments and forbearances
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Players in the Game Guarantor
Provides insurance to the lender that your loan will be repaid
You may select your guarantor Secondary Market
A secondary market is a company which purchases student loans from a lender making funds available to the lender to make new loans to other students
If your loan is sold to a secondary market: It will not change the conditions of the loan You will be notified in writing You will direct any future correspondence to the
new holder
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Master Promissory Note The MPN is a legal document which you
sign to indicate your willingness to repay a student loan
The MPN will contain your Rights and Responsibilities as a borrower
The MPN may be used as a single year note or a multi-year note If your school uses the MPN as a single year note, you
must sign a new MPN for each new loan you borrow If your school uses the multi-year feature of the MPN,
you may receive multiple loans without signing a new MPN
You may be required to sign a new MPN if you change schools
You will be required to sign a new MPN if you change lenders
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Loan Facts
You may reduce or cancel your loan prior to disbursement
You may prepay your loan without penalty
You must maintain Satisfactory Academic Progress (SAP) as defined by the school to continue receiving loans
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Keeping in Touch
You must inform your lender if: You change your name Your address changes Your phone number changes You withdraw from school You drop below half-time enrollment You graduate You change employment You have a change in status which will affect
your loan status You are having difficulty repaying your loan
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Grace Period
You will have a grace period of six months before your loan goes into repayment
The grace period begins the day after you graduate, withdraw from school or drop below half-time status
You can only receive one grace period per loan
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Repayment
You are required to repay your student loans even if: You do not complete your education You do not find a job in your field of study You do not find employment upon completion
of your education The education you received did not meet your
expectations
Investigate electronic repayment options Some lenders/servicers offer interest rate
reductions for this option
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Repayment Options Standard Repayment
Requires minimum monthly repayment of $50 per loan
Graduated Repayment Smaller initial payments Payments will increase over time
Income-Sensitive Repayment Payments are annually adjusted based on
income Extended Repayment
For borrowers with more than $30,000 in loans Maximum repayment period is 25 years Payments may be graduated or fixed annually
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Loan Consolidation Available after you complete your
education
Allows you to combine loans from different lenders into a single loan
Allows you to reduce your monthly payments and extend your repayment period
The interest rate on the consolidation loan may be higher or lower than the interest rates of the individual loans
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Deferment
You may request a deferment: If you are enrolled at least half-time at an
eligible institution For up to three years if you are seeking but
unable to find full-time employment For up to three years if you have an economic
hardship
You must provide a completed Deferment Request form and evidence verifying your eligibility for deferment to your lender
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Forbearance A forbearance can allow you to temporarily
reduce or suspend making payments You are responsible for all interest which
accrues during the forbearance period Interest may be paid as it accrues, or Interest may be capitalized
Your lender may grant a forbearance if: You experience economic hardship You are affected by a local or national
emergency, or natural disaster You are affected by a military mobilization You are serving in a position which may qualify
you for loan forgiveness or partial repayment of your loan
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Discharge and Cancellation Your loan may be discharged if:
You die You are totally and permanently disabled You are unable to complete your education
because the school closed, falsely certified a loan, or fraudulently completed a loan application in your name
Bankruptcy generally does not result in the cancellation of a student loan
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Other Discharge/Repayment Options Loan Discharge/Forgiveness Program for
Teachers working in a low-income school
AmeriCorp service
Certain branches of the armed forces may repay a portion of your loans
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Consequences of Default
A loan is considered to be defaulted if you fail to make payments for 270 days
Defaulting on your student loan can result in: Damage to your credit rating Wage garnishment Denial of professional licenses Withholding of federal and state tax refunds Liability for collection costs and legal fees Referral of account to a collection agency Denial of access to student transcripts Loss of eligibility for future student financial aid
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