The purpose of this sections is the inform you of the general provisions associated with scholarships and student loans.
- What is a FFELP loan?
- What is the difference between the Subsidized and Unsubsidized Stafford Loan?
- What are some benefits of the Stafford Loan?
- How much can I borrow with a Stafford?
- What is the interest rate on a Stafford Loan and are there loan fees?
- If I do not graduate, do I have to repay my Stafford Loan?
- Who is my lender?
- What is loan counseling and why do I have to have it?
- How long after I've been awarded will I get the promissory note?
- What are some of the benefits of the Graduate PLUS Loan?
- How much can I borrow with a PLUS Loan?
- What is the interest rate on a PLUS Loan and are there any fees?
- What if I am turned down for a PLUS Loan?
- Why was my loan sent back to the bank?
- How can I get an In-school Deferment on repayment of my loan?
- If I am in default on a previous loan, what documents are needed to clear the default?
- If I take a leave of absence, do I have to start repaying my loans?
- What are Private or Outside Scholarships?
- If I get a private scholarship, what impact does this have on my eligibility for other financial aid?
- Are scholarships awarded for one year or are there scholarships that are guaranteed for all four years?
- Why do people consolidate their federal student loans?
- How is my interest rate calculated for a consolidation loan?
- Are there prepayment penalties with a consolidation loan?
- Will I incur any fees or charges consolidating my student loan?
- Am I still eligible for the same Federal benefits after I consolidate?
The Federal Stafford and Graduate PLUS Loans are offered through the Federal Family Educational Loan Program (FFELP). Private lenders fund these loans. The federal government guarantees the loan against default, which allows lenders to offer loans at very attractive interest rates. These loans are sometimes referred to as Federal government guaranteed student loans.
2. What is the difference between a Subsidized and Unsubsidized Stafford Loan?
A Stafford Loan is a government-guaranteed loan available to students. There are two types of Stafford loans; subsidized and unsubsidized. With a subsidized Stafford, the government pays the interest while you're in school. With an unsubsidized Stafford, you are responsible for the interest while you are in school. You can either elect to pay the interest while you are in school or defer it until after graduation. You should note that if you defer the interest, it will be capitalized upon graduation and will raise the overall cost of your loan.
3. What are some benefits of the Stafford Loan?
The interest rate is fixed at 6.8% for the life of the loan · It carries low origination and guarantee fees, often paid for by the lender · There is no credit check · Repayment of the loan does not begin until you graduate or drop below half-time status · The loan is forgiven in case of permanent disability or death.
4. How much can I borrow with a Stafford Loan?
Students eligibility is determined by the Financial Aid Office. Students will be notified of the exact amount they can borrow in the Financial Aid Award Letter. Students can never borrow more than the cost of education, less other financial aid received. For the current academic year, students may borrow up to $20,500 in Federal Stafford loans, with no more than $8,500 Subsidized.
5. What is the interest rate on a Stafford Loan?
The rate is fixed at 6.8% for the life of the loan. There is a combined fee of 2%; origination fee is 1% and guarantee fee is 1%. These fees are deducted proportionately from each loan disbursement so that you aren't required to come up with any up-front money to obtain the loan. Some lenders currently pay these fees for students.
6. If I do not graduate, do I have to repay my Stafford Loan?
Yes. The Stafford Loan, like any other loan, must be repaid.
The "lender" is the lending institution (bank, credit union, etc.) that makes your student loan funds available to you. Students should refer to their award notification, promissory note, or notice of guarantee to find the name of their lending institution.
8. What is loan counseling and why must I complete this process?
Loan counseling is required by federal regulations for all first-time borrowers at a school. The session gives an overview of the Federal loan program, discussing the types of loans, interest rates, borrower rights and responsibilities, etc. This obligation is fulfilled at at EdTest Loan Counseling.
9. How long after I've been awarded will I get the promissory note?
First we must have your Stafford loan request form, loan counseling, and a designated lender in order to transmit the data to the lender or guarantee agency. They approve the loan and e-mail the promissory note information to you. The student completes the note and sends it back to their lender or guarantee agency. Then the lender will send the funds to the student's account in the Bursar's Office. All of this should take approximately 2-3 weeks, allowing time for mail and assuming prompt response from the student. If you use electronic signature processing will be faster.
10. What are some of the benefits of the PLUS Loan?
The interest rate is capped at 8.5% for the life of the loan · It has no prepayment penalty · It has lenient credit criteria, often more lenient than with other types of loans · It allows you to keep other assets, such as savings, retirement, and home equity intact. · It protects you in case of permanent disability or death. In this case, the loan would be forgiven.
11. How much can I borrow with a PLUS Loan?
You can borrow up to the cost of attendance, minus any other financial aid you receive. The cost of attendance is determined by the school's financial aid office, and usually includes tuition, room and board, books, living costs and transportation expenses.
12. What is the interest rate on a PLUS Loan?
The rate is fixed at 8.5% and some lenders offer borrower benefits that discount the interest rate below the standard rate. There is a combined fee of up to 4% of the loan. For PLUS loans, there is a 3% origination fee that goes to the federal government and a 1% guarantee fee that goes toward the guaranty agency that insures your loans. These fees are deducted proportionately from each loan disbursement so that you aren't required to come up with any up-front money to obtain the loan. For the current academic year, most lenders are paying the 1% guarantee fee for the student.
13. What if I am turned down for a PLUS Loan?
Your lender will notify both you and the Financial Aid Office of their credit decision. If you are denied credit, you should ask to speak to the lender’s credit department to determine why you were denied the PLUS loan. You have the option to ask the lender to reconsider your loan application and there is the option of a loan endorser if you do not meet the initial credit requirements.
14. Why was my loan sent back to the bank?
Students must meet certain requirements within 3 days after their loan funds arrive at the school. If these requirements are not met within that time frame, we have to return funds to the lender.
15. How can I get an In-school Deferment on repayment of my loan?
The Registrar’s Office at TJSL will send electronic enrollment information to the National Student Clearinghouse periodically throughout the semester. This information should be enough to get your prior loans entered into an in-school deferment. If you continue to receive billing statements from your lender, you can request the deferment form from your bank and have our Registrar's Office complete it, then return it to the bank. Continue to make all payments until the bank sends you confirmation of your deferment.
16. If I am in default on a previous loan, what documents are needed to clear the default?
A letter is required from the agency, or holder of the defaulted loan, stating that the default has been cleared.
17. If I take a leave of absence, do I have to start repaying my loans?
Not immediately. The Federal Stafford Loans have a grace period of six months and the Federal Perkins Loans have a grace period of 9 months before the student must begin repaying the loan. When you take a leave of absence, you will not have to repay your loan until the grace period is used up. If you use up the grace period, however, you will have to begin repaying your loan immediately when you graduate. It is possible to request an extension to the grace period, but this must be done before the grace period has ended. If your grace period has run out in the middle of your leave, you will have to make a payment on your student loans.
18. What are Private or Outside Scholarships?
Private scholarships are awards provided by organizations outside of the University, such as Elks, Rotary, national organizations, churches etc. You apply directly to the organization sponsoring the scholarship. The organization then selects the recipient(s) and sends the funds to the University which are then applied to your student account.
19. If I get a private scholarship, what impact does this have on my eligibility for other financial aid?
If you receive a private scholarship award, this may impact your financial aid award since the combination of all financial aid and scholarships cannot exceed your need. First, the loans that are offered to you will be reduced, then other aid. A revised award letter will be mailed to notify you of the changes. If you know that you will be receiving a private scholarship, please contact our office as soon as possible to prevent receiving an overaward and possible repayment of aid you have already received.
20. Are scholarships awarded for one year or are there scholarships that are guaranteed for all four years?
A number of scholarships, particularly those awarded on merit and need basis, are awarded annually and generally renewable for subsequent years, provided the recipient maintains the required grade point average.
21. Why do people consolidate their federal student loans?
When consolidating student loans, you lock in the interest rate for the duration of the consolidation loan.
22. How is my interest rate calculated for a consolidation loan?
The lender will take a weighted average of the interest rates on all of the loans to be consolidated and round up to the nearest 1/8 of 1%.
23. Are there prepayment penalties with a consolidation loan?
NO! There is no penalty for prepaying your consolidation loan at any time. In fact, every penny you pay over the amount owed each month is automatically applied towards the principal, NOT interest.
24. Will I incur any fees and/or charges consolidating my student loans?
You will not incur any fees, costs, or charges for consolidating your student loan debt. The US department of Education does not assess any fees to the borrower on the consolidation loan.
25. Am I still eligible for the same Federal benefits?
Yes! Because student loan consolidation is a federal program, you are still entitled to benefits such as deferment, forbearance, and tax-deductible interest. The loan is also government guaranteed as well as federally insured.