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Loans
Loan Basics
Over the years, there has been an increase in the percentage of financial aid awarded in the form of loans. Low interest rates have made borrowing attractive for students and families. Loan programs make it possible for millions of students, who previously could not afford it, to obtain a post-secondary education. By spreading the cost of their education over the term of the loan, they can attend the school of their choice.
Available Loans
Federal Stafford Loans
Both undergraduate and graduate students can benefit from low-interest, government guaranteed Stafford Loans. All students are eligible for Federal Stafford loans if they are enrolled at least half-time in an eligible program. Depending on your family's financial situation, you may be eligible for one or both loans.
This loan is based on financial need. The government pays the interest while you're in school, in deferment, or during your grace period.
Unsubsidized Federal Stafford Loan
This loan is available to all students regardless of income. You are responsible for all interest that accrues while you are in school, in deferment, or during your grace period.
PLUS Loans
PLUS Loans (Parent Loan for Undergraduate Students ) are affordable, low-interest educational loans designed to help parents pay for their child's education. Eligibility for these government-guaranteed loans is not based on financial need, but on a good credit history.
Alternative Loans
Alternative loans are private loans through a lending institution and not part of federal government programs. Alternative loans are more expensive than federal government guaranteed loans and should only be used when all other options have been exhausted. Alternative loans are in the student's name and a cosigner is usually required.
Managing Loans
Repayment
There are four repayment plans for federal loans: Standard Repayment, Extended Repayment, Graduated Repayment, and Income Contingent Repayment. The Extended, Graduated, and Income Contingent plans offer lower monthly payments which extends the term of the loan and increases the total amount of interest paid over the lifetime of the loan.
You have the opportunity to change your repayment annually, as long as the maximum loan term for the new plan is longer than the amount of time your loans have already been in repayment.
The repayment plans are as follows:
Standard Repayment
- 10-year repayment period
- An interest rate of 8.25%
- Minimum monthly payment of $50
Extended Repayment
- Minimum monthly payment of $50
- Loan term of 12 to 30 years
- Smaller payments over a longer period of time but more interest to pay
Graduated Repayment
- Payments are lower at the beginning of your repayment period and increase every two years
- Loan term is 12 to 30 years
- Minimum monthly payment is $25
- Monthly payment can be no less than 50% and no more than 150% of the monthly payment under the standard repayment plan
Income Contingent Repayment
- Payments based on income and balance of loan and fluctuates with your annual level of income
- Payments must at least equal the interest accrued on the loan between scheduled payments
- The loan term is up to 25 years
- $50 minimum monthly payment
Loan Consolidation
To consolidate a loan means to combine one or more loans into one larger loan (or payment) with more lenient terms. The purpose of consolidation is to simplify loan repayment by combining several types of loans that may have different terms and repayment schedules or may have been made by a variety of lenders. Advantages include a lower interest rate and lower monthly payments overall. This also decreases the amount of time needed to repay the loans. Consolidation of loans results in more manageable debt, enabling you to avoid defaulting on your payments.
If you consolidate eligible loans before you enter repayment, you may receive a lower interest rate. The difference between your interest rate during your in-school or grace period and during the repayment period can be as high as 0.6%. Rounding up the weighted average can potentially cost students as much as 0.12%.
To find out more about loan consolidation, check with your lender.
Preventing Default
- Understand your options and responsibilities before taking out a loan.
- Make your payments on time.
- Notify your lender or servicer promptly of any changes that may impact the repayment of your loan, including changing your address, and/or name or leaving or transferring to another school.
- Consider applying for a deferment or forbearance on your loans. It is preferable to defer your payments then to default on your loan.
Deferments and Forbearance
If you are having trouble making your loan payments you can defer or place it in forbearance - postpone the repayment of your student loans until you are able to make monthly payments. Find out details before you decide to default on loans. If your loan is already in default, you will not be eligible for deferment and forbearances.
For more information, contact the financial aid office at the school that issued the loan and/or the original lender or current servicer of your loan.
In-School Loan Deferment
An In-School Loan Deferment allows you to postpone repaying a loan for a period of time for a specific reason. Most federal loan programs allow students to defer their loans while they are in school at least half time. The federal government pays the interest on the Perkins Loans and Subsidized Stafford Loans during the deferment period.Interest still accrues during the deferment period on loans such as the Unsubsidized Stafford loan. Interest payments can be postponed and capitalized (added to the principal) at the start of repayment.
Deferments are commonly granted for:
- Students who are enrolled in undergraduate or graduate school
- Disabled students who are participating in a rehabilitation training program
- Unemployment
- Economic hardship
- Teaching in a “designated shortage” area
- Service in the armed forces
- Parental leave
These deferments apply to the Stafford and Direct loans, but not the Perkins loan. Deferments are not granted automatically. You must submit an application and provide documentation to support your request for a deferment. Do not stop making payments on your student loans until you've been notified that you've been granted a deferment. There are limits on the length of a deferment.
Other deferments may also be available; contact your lender for details.
Loan Forgiveness
The federal government will consider forgiving part or all of an educational loan under certain circumstances. These include:
- Performing volunteer work
- Serving in the armed forces
- Teaching in a public or private non-profit elementary or secondary school that has been designated as a low-income school
- Working full time for at least two full consecutive years as a child care provider at a facility that serves a low-income community
- Practicing medicine in designated communities.
Loan Counseling
Loan Entrance Counseling
The Entrance Counseling sessions is required for students requesting loans. This session will only take around 20-25 minutes of your time. You will have to take a multiple choice quiz which is "open book", so you can't fail.
The Federal Government requires all students be counseled regarding your rights and responsibilities as a student loan borrower before you borrow. Your student loan money will not be applied to your bill until this federal requirement is taken care of.
Click on the link below to connect to an Individual Loan Counseling Session.
Loan Exit Counseling
Before you graduate (or if you drop below half-time attendance), regulations require that you complete an exit counseling session. The counseling session provides information about how to manage your student loans after college. Click the link below to complete the session.
For direct consultation and/or assistance on applying for loans, contact our Financial Aid office at (402) 449-2810 to schedule a meeting with a Financial Aid Counselor.
Financial Aid Links
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