Student Loans & Financial Aid info

Parents of dependent college students can borrow a PLUS College Student Loan to help pay educational expenses of an undergraduate college student enrolled at least half time in an eligible program at any eligible school. PLUS College Student Loans are available through the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct College Student Loan (Direct Student Loan) Program. An acceptable credit history is required to receive a PLUS college student loan.

While filing the a Free Application for Federal Student Aid (FAFSA) is not really a requirement to receive a PLUS college student loan, most schools do require a FAFSA be filed before they will certify a PLUS college student loan. It is always recommended that families file a FAFSA whether you think you will qualify for federal aid assistance or not.

If the school is a Direct Student Loan school, a parent will need to contact the school directly in order to receive the direct student loan. Funds for Direct Student Loans come directly from the federal government.

If the school is a FFEL school, you will need to obtain your college student loan through a bank or financial lending institution. Your school can provide a list of lenders to help you narrow your choices down. However, you can choose any lender you wish to choose. Do compare your options before you choose a borrower. Many lenders will offer repayment incentives that can lower the cost of a PLUS college student loan.

A parent will typically be required to pass a credit check. However, the credit check is not as demanding as it is for other private loans with which you may be more familiar (e.g., an auto loan or mortgage). If the parent borrower has been denied based on credit, they may still be eligible to get the student loan if they can get someone like a relative to endorse or co-sign the college student loan. The student and parent must also meet other general eligibility requirements for a federal financial aid.

A parent can borrow up to the cost of attendance, which is established by the school, minus other financial aid including other college student loans.

For PLUS College Student Loans disbursed on or after July 1, 2006, the interest rate has been fixed at 7.90 percent. For Direct PLUS College Student Loans as well as the FFEL PLUS Loans, the interest rate is at 8.50 percent.

A fee of up to 4% will be charged to the borrows of a PLUS college student loan. Many lenders will pay this fee on behalf of the borrower, but not all of it. It is most important to carefully review and read the terms of your college student loan when they are presented to you by your lender.

Repayment of a PLUS college student loan begins immediately after the final disbursement of the student loan funds. PLUS college student loans, like all federal college student loans, are disbursed in equal amounts over the course of the academic year. For a school that uses semesters, that would mean two disbursements during the year, one in the beginning of the fall and one in the beginning of the spring. Payment would begin after the spring disbursement has funded.

The standard repayment term would generally be ten years. However, depending on the total amount borrowed the repayment term can be extended up to 25 years. If extenuating circumstances have developed during repayment, a borrower may request forbearance or temporarily stop paying. During a forbearance, the borrower does not have to make any payments, but interest does continue to accrue and will be added to the principal if no payments of interest have been made.

How does one become eligible for federal financial aid?

Federal financial aid is available for those college students who:

• Are U.S. Citizens, U.S. Nationals, permanent residents, refugees, asylees, and other eligible non-citizens
• Have a valid Social Security number
• Are enrolled at least half time
• Are enrolled in an undergraduate or graduate program that leads to a degree or certificate
• If male, are registered with the Selective Service if required
• Are not in default on a current federal college student loan and who do not owe a refund on a federal grant
• Are making satisfactory academic progress
• Demonstrate financial aid need (except for the Unsubsidized Stafford College Student Loan and the Parent College Student Loan for Undergraduate Students PLUS Loan and some scholarship programs

Federal financial aid is not available for the below categories of college students.

The following categories of college students are not eligible for federal financial aid:

• International students who are in the country only temporarily
• Other categories of non-immigrant college students
• College students on Limited or Special Status
• Graduate college students with no degree objective
• An exception is available for college students admitted on a Limited Status who are required to take prerequisite coursework prior to full admission into the Graduate Division. If you fall into this category, you must submit documentation from the Graduate Admissions Office confirming that you are taking prerequisite coursework for graduate admission.
• College students who take classes through University Extension only
• Undergraduate college students who have been enrolled for the equivalent of 18 quarters or longer

College students studying for a second baccalaureate degree will be eligible for one or two years (depending on the terms of their admission) of limited funding from college student loan programs only. College students who have been enrolled for the equivalent of 16 quarters or longer will lose there eligibility for any additional Grants.

College students who do not meet the eligibility criteria above should qualify for alternative or private college student loan programs and even some scholarships. The financial aid office of the college or university you are attending can help you with choosing a private college student lender.

How is your federal financial aid calculated?

About one to three weeks after you have submitted your FAFSA, your college or university will receive your FAFSA application information electronically from the federal processor. It is important that you respond promptly to any requests they may have for supplemental information or documentation. Once your file is complete, your college or university will review all of the information provided to determine your federal financial aid eligibility and the types of financial aid for which you will qualify.

Your eligibility for federal financial aid is the difference between the established college expenses for the academic year and your expected family contribution (EFC). Your EFC is the number used when determining your eligibility to receive federal financial aid funds.

Once your federal financial aid need has been determined, your college or university will offer you a federal financial aid award package. This package can contain grants, student loans, Work-Study, fellowship or even scholarship funds. You will receive notification of your federal financial aid awards by letter and on the internet. Your federal financial aid offer will list the types and amounts of financial aid for which you have qualify.

College is not cheap, do you agree. Fortunately, it is pretty easy to obtain a college student loan to cover the costs of getting that higher education. Unfortunately, while college student loans can remove the financial barrier to attending college, they often come back to bite us when we failed to properly research all the many available options.

There are three primary types of college student loans; federal college student loans made directly to the student, federal college student loans made to the student’s parents, and college student loans from private financial institutions like banks and credit unions.

The three primary types of college student loans will carry different payment schedules, student loan limits and most importantly interest rates, so it is important to choose carefully based on your specific financial needs and ability to repay the student loan. Believe me; there is no worse feeling than graduating from college ready to take on the world only to realize you will be doing so with a huge debt due to the burden of hefty monthly college student loan payments.

Direct Federal College Student Loans
If you have already saved money to pay for most or even part of your higher education, or will be able to earn enough money during your college years to cover some of the costs, then a direct federal college student loan is probably one of your best options.

Federal college student loans made directly to the students’ usually have a pretty modest limit, helping to prevent the inadvertent accumulation of an overwhelming debt. Furthermore, depending on your financial aid needs, the government may subsidize a federal college student loan by doing away with interest all together. It is important to know they do not actually not charge interest; the government will pay that portion of the student loan for you. This is what subsidized means.

Going with a direct federal college student loan may mean a more busy lifestyle during college, especially if you will need to work long hours to make up any differences, but the far more manageable college student loan payments following graduation are sure to keep a smile on your face.

Federal College Student Loans to Parents
The primary benefit of a federal college student loan made to one’s parents is the ability to borrow a far more substantial amount of money, making this type of college student loan a natural choice if you will be attending a particularly expensive college or university.

However, payments on a federal college student loan to a student’s parents must begin immediately, and the legal responsibility for repayment rests on the parents alone. Federal college student loans to parents also carry a large 8.5% interest rate.

Private College Student Loans
Private student loans will offer the best of both types of federal college student loans with their higher limits and ability to start repaying only after graduation. However, private student loans are also one of the easiest way to accidentally get a massive debt that could very well take the next 20 years after graduation to pay back.

Private student loan applications are usually processed fast and require little if any proof of the actual need for the amount requested, making private college student loans by far the most popular method of financing higher education. As a result, an ever-growing number and type of financial institutions would be offering competitive private student loan packages.

The rapid application process and lack of lending safeguards are precisely, what leads to trouble with private college student loans. All too often, additional funds are borrowed for what may seem like a good idea while in college, but in retrospect would probably be considered unnecessary temporary luxury leaving nothing but more debt.

Private college student loans are not a bad way of financing your higher education, but they should be entered into with careful planning and much caution.

Whatever your financial situation and needs are, there is a college student loan out there for you. However, with any important financial decision, steering clear of the risks associated with college student loans requires a bit of research and planning.

As the cost of a college education continues to rises, and federal college student loan limits fail to keep up, the private student loan business has grown very quickly. These private college student loans are used to fill the gap between available federal financial aid assistance and what students and families can afford to pay out-of-pocket for higher educational costs. However, these private student loans lack the more affordable, fixed interest rates, and flexible repayment options that federal college student loans will have. Prospective borrowers should exhaust all federal grant and federal college student loan options (including PLUS loans) before considering any private college student loans.

Banks and other financial institutions will make private student loans without any financial backing from the federal government. Interest accrues on all private college student loans from the time they are disbursed, although interest costs can sometimes be deferred and capitalized when you are ready to begin repayment. There are many different types of private student loans, each program with its own rules and specific requirements. Private college student loans are also called private label or alternative student loans, and are often provided by the same lenders that also will provide federal FFEL student loans. Because the government will not subsidize private college student loans, the rates and terms are not regulated the way they are for federal college student loans, which makes private student loans more risky and expensive.

What kind of interest rates, fees, and cash limits will you receive? Private student loan terms and conditions, including interest rates and fees, will generally be based on your credit history or your co-signer’s credit history. This means that low income students or those with some negative credit histories will likely receive college student loans that are more expensive. Like government college student loans, private student loans are supposed to be used specifically to finance postsecondary education (including books, transportation, and room and board). You will need to check your school’s estimated cost of attendance and consult with the federal financial aid assistance office before deciding on a private student loan amount.

Private student loan lenders may pressure or even require you to get a co-signer. A co-signer is someone such as a relative, friend or someone else who agrees to be responsible for your debt. Co-signers must understand that they will become responsible for paying back the debt just as if they have received the money.

There are a few very important differences between government college student loans and private student loans. If you take out a private student loan, you will not be eligible for the same types of discharge options available for federal financial aid student loans. The same will be true for deferment and forbearances. It is very important that you read your student loan contract very carefully to learn about your private student loan’s particular terms, conditions, benefits, rates, fees, and penalties. Private college student loan lenders will have to honor any promises they make about terms and benefits.

Many students are eligible for some kind of free financial aid assistance or a college student loan, either in the form of need based grants, or merit based scholarships. However, grants and scholarships will not always provide enough funds to cover rising college tuition and costs. After you have applied for and received all the possible free financial aid assistance, it might be time to take out a college student loan to meet the balance of your college educational expenses. Federal and state governments have devised guaranteed college student loan programs that allow students to borrow money at a lower interest rate to make up the difference that free financial aid assistance will not cover. However, before you decide to borrow money through a college student loan, there are some important things to consider:

• What are the interest rate charges?
• How long do you have to repay the student loan?
• Does repayment begin during or after you have completed college?
• What is the minimum payment required per month once payment does start?
• Will your income after college cover all of the expenses, including student loan payments?

At the time of disbursement, college student loans may seem like free money because repayment is not required immediately. However, it is important to remember, that you will eventually have to repay all the money you have borrowed, not to mention the interest. Some borrowers may think that the government is too big and bureaucratic to keep track of all the college student loans they issue. Unfortunately, in the past this was often the case. Yet, even though recent legislation has increased the total amount of college student loan money available, default rates have been dropping, standing currently at about 7 percent.

To not join those who do find themselves deeply in debt, a good thing to do before you decide to borrow money is to very seriously consider your current financial situation and then project what your future income and expenses could be like once you have graduated from college and start your new career. While this will certainly be a difficult task to accomplish, it just might prevent you from extending yourself beyond your financial means. To financially plan your future, you must estimate the total cost of your education, then estimate the amount of money you will expect to earn after graduation in your chosen profession. Now deduct your future cost of living expenses to determine how much money you have left for monthly college student loan repayments. A financial adviser or student loan officer at a bank or financial institution can help you with any of these formulas.

As you see, it really is quite easy to get started. Make sure you ask all the questions and compare all college student loans that have been offered to you. Whether it is a government college student loan or a private student loan, they will all be different. Above all, have fun and learn something. Do your self a favor now, because it will only enhance your future.

If you think your student college federal student financial aid paperwork reads like a Greek 101 exam, you are not alone. Sorting through the Free Application for Federal Student Aid (FAFSA) form can be a little confusing at best and an incomprehensible nightmare at worst.

If you have not filed an FAFSA yet, you need to get on it. This form must be completed if you want your son or daughter to be eligible for federal and state financial aid. A lot of federal student financial aid is distributed on a first come, first served basis, so the sooner you file the better off for your student to be.

After filing, you will then receive a Student Aid Report (SAR). Your SAR report will also be available online at the FAFSA Website.

This report will summarize the information submitted on the FAFSA and will also list your expected family contribution (EFC), which is the amount of money the government will expect your family to pay for college educational costs. The EFC is used to determine your student’s eligibility for federal student financial aid.

Be sure you are sitting down when you open that envelope; the money you will have left after the EFC is deducted will not be too far from the poverty thresholds determined by the Department of Health and Human Services.

The first thing you should do is make sure the information on the SAR report is complete and correct. In case of any errors, resubmit the form to the central processor as soon as you can. Corrections will go through in a couple of weeks, and each college that your student applies to will have access to all the updated information.

Student’s who have estimated their earnings may need to re-submit the form if their guesses were far off. A quick glance at your W-2 forms should tell you how close your estimates really are. Most students should not have a problem since their final pay stub of the year will show how much they have earned for the year.

Most colleges and universities will start sending out admission acceptance letters in March and federal student financial aid award notices will come very close behind. Expect a federal student financial aid award letter to arrive within about two weeks of an acceptance letter. Many schools send out acceptance and federal student financial aid notifications on the same day.

In a federal student financial aid package, a college or university will try to make up the difference between the cost of attending school and a family’s expected contribution as will be spelled out in a SAR report. Some will do better than others do. Three schools with similar costs may offer completely different federal student financial id packages.

Much will depends on a student’s past grades, a family’s federal student financial aid need and how much federal aid is actually available from a school. Private schools will tend to have deeper pockets than state schools. Many middle class families could find themselves in a hard spot. They will have too much money to qualify for a need based financial aid, but too little money to cover college costs on their own. Therefore, parents or students — or both — take out private student loans.

If your student is determined to go to an Ivy League school, you do not need to despair. Following Princeton’s lead in 2001, all of the Ivy League schools have adopted a need blind acceptance and most will also offer grants (which do not have to be paid back) instead of private student loans to qualified students.

The expected family contribution (EFC), is the amount of money that a family is expected to contribute toward the price of a student’s education from there income and assets. There is a different financial aid need analysis formula for each of three student groups:

• Dependent Students
• Independent Students W/no Dependent
• Independent Students with Dependent

The EFC will consist of two parts: the parental contribution and the student contribution. Generally, a family contribution refers to both Parent and Student combined. For independent students, there would be no parent contribution.

Assets will usually be excluded from the EFC calculation for those with an adjusted gross income being below $50,000. When assets have been taken into account, the EFC formula will provide an asset protection allowance according to your age and marital status. The typically usual family receives an asset protection allowance of $45,000. This amount will be subtracted from the parents’ total net worth of assets and, of the remainder; only 12 percent will be considered available assets for educational expenses. Independent students with children will also receive the asset protection allowance, but the assessment rate is now only 7 percent.

In comparison, if you are a dependent student or independent student with no dependents you will be expected to contribute 20 percent of the total assets, since it will be assumed that these students have saved their money for the purposes of paying for their higher education.

What assets will they be using to calculate the EFC?

• Real Estate other than the family residence
• Investments
• Family owned business with more than 100 employees
• A Farm that the family does not live on
• Current cash, savings, and checking accounts
• Educational IRA or savings plans, if owned by the student’s parents

The following assets will not be included:

• The value of IRAs and other Retirement plans
• Home Equity (the difference between home value and home debt)
• Farm Equity for a farm in which the family lives (the difference between the value of the farm and the debt against the farm)
• Family owned business with fewer than 100 employees
• Cash value of Life Insurance Policies

To determine the amount of income that would be available for educational purposes, both parents and students are given offsets against income. Offset will include taxes (federal, state, local, FICA), employment expenses, and an income protection allowance. For parents and independent students that do have dependents, the income protection allowance can range from $15,000 to $45,000, based on the family size and number of family members that are enrolled in college.

After they have subtracted the offsets from the total income, the remaining income is called the available income. For parents and independent students that do have dependents, the available assets are added to the available income to get to the adjusted available income (AAI). A portion of this amount will be multiplied by 22 to 47 percent (plus an additional predetermined assessment) to arrive at the total contribution. Unfortunately, the higher the income, the higher the percentage used.

Dependent students as well as independent students without dependents are expected to contribute 20 percent of their available income and receive a more limited income protection allowance:

• $3,080 for dependent students
• $6,220 for single independent students
• $6,220 for married independent students with both enrolled
• $9,970 for married independent students with one enrolled

What income will be used to calculate the EFC?

• Adjusted gross income, if taxes filed, or total wages
• Non-taxable income, including earned income credits, public assistance, contributions to tax-deferred pension and savings plans, IRA deductions, any child support, untaxed portions of retirement distributions and other items listed on the financial aid application

The following income will not be included:

• Food stamps or subsidized housing
• Student financial aid awards, including need-based work study earnings
• Federal education tax credits
• Child support paid to another household

The Nursing Student Loan (NSL) program is available those that are a U.S. citizen, U.S. national, or permanent resident who are enrolled at least half time as an undergraduate or a graduate student in a nursing degree program. You can be awarded up to $2,500 per academic year, depending on your financial need. The annual limit increases to $4,000 during your final two years of the nursing degree program. The total NSL maximum is $13,000. The interest rate will be 5 percent and interest does not accrue during periods of deferment. For consideration for a nursing school loan, you must report parental data on the FAFSA, even if have had independent student status.

Each and every time you accept a nursing school loan (NSL), you will be mailed a paper promissory note and a loan disclosure form that you will be required to complete and return before your nursing school loan funds will be disbursed to you.

If you have accepted a nursing school loan award, a promissory note will be required. A promissory note is a legal and binding contract for your promise to repay the nursing school loan according to the terms listed on the note. The promissory note will give details on the nursing school loan amount, interest, and repayment terms.

Promissory notes can usually be accessed online; however, paper promissory notes will also be available by contacting your lender.

For some nursing school loans, you will have to complete a master promissory note, which will be good for one or more nursing school loans for one or more academic years. Other nursing school loans require a new promissory note for each loan. Be sure to check with your University e-mail account and follow the instructions you have received to complete your promissory note(s). Your nursing school loan funds will not be disbursed until your submitted loan documents have been confirmed by the University or College of your choices Office of Student Finance.

With most Nursing Student Loans you will be required to attend an exit interview when you:

• Are ready to graduate.
• Leave the University (even if it is just temporary).
• Drop your registration below half time enrollment.
• Transfer to another school.
• Leave for a National Student Exchange (NSE) experience.

Exit interviews will usually be conducted on campus by Student Financial Office and are required of all borrowers from federal and University nursing student loan programs. At an exit interview, you will receive information regarding the rights and responsibilities of the borrower and a lender and servicer. You will also be told about repayment, deferment, and cancellation of your nursing student loans. For University based loans, your repayment terms will include length, interest rate, outstanding balance, and payment amounts.

Federal regulations and University policy do require student financial offices to maintain documentation that you have attended an exit interview. For University based nursing student loans, you will be required to complete and sign various different forms. If you have not completed the paperwork, a hold will be placed on your record.

If you have borrowed from the William D. Ford Federal Direct Loan Program, you will have to go online to www.dlservicer.ed.gov to complete an exit interview. Your Financial Aid Office staff can provide general information on the Federal Direct subsidized and unsubsidized loans in their exit interviews, however the financial aid office will not handle exit interviews for that particular loan program.

Exit interviews are required if you have borrowed from any of the following student loan programs:

• Federal Perkins Loan
• Health Professions Student Loan
• Nursing Student Loan
• Primary Care Loan
• University Trust Fund Loan

A federal college student loan will allow a student and their parents to borrow money to help pay for college through student loan programs that are supported by the federal government. They will usually have lower interest rates and offer very attractive repayment terms, benefits and many different options. Generally, repayment of a federal college student loan does not begin until after the student has left or graduated from school. Federal college student loans can be used to pay many school expenses such as tuition and fees, room and board, books, supplies and transportation.

Federal college student loans are given to students through two kinds of programs: the Direct Student Loan Program and the Federal Family Education Student Loan Program. Both programs will essentially offer the same type of college student loans with similar loan terms and borrower benefits. Your school will choose the college student loan program in which it will participate. In both programs, college student loan funds are provided to you through your school.

A private student loan is a non-federal college student loan issued by a lender or financial institution such as a bank or credit union. Private student loans will often have variable interest rates, will always require a credit check and will not provide the benefits of federal college student loans.

Federal college student loans will offer borrowers multi benefits you will typically not find in a private student loan. These will include a low fixed interest rate, income-based repayment plans, and student loan forgiveness and deferment options, including deferment of college student loan payments when a student returns back to school. These are just some of many different reasons why a student and parents should always exhaust federal college student loan options before considering a private college student loan.

To get a federal college student loan, you will have to complete the Free Application for Federal Student Aid (FAFSA). The best and easiest way to complete the FAFSA is online at www.fafsa.ed.gov. There, you will identify schools that you are interested in attending. When your FAFSA has been processed, the schools you have identified on your application will receive your information. The school will then contact you and let you how much financial aid is available for you, including grants, scholarships, work opportunities and federal college student loans. Should you choose a federal college student loan, your school will provide you with instructions on the next step, including how to select a lender.

Undergraduate college student loan limits range from $3,500 to $10,500 per year depending on particular factors, including the student’s year in college. Some graduate students will be able to borrow up to $20,500 each year. Parents can also get federal college student loans to help pay for the remainder of college costs that would not be covered by their children’s other financial aid assistance. This kind of loan is called a PLUS loan. In addition, graduate students can obtain a PLUS loan to help pay for their own education.

While the application process may be easier in some instances for a private college student loan, federal college student loans usually will have lower interest rates and a better repayment term and options than private college student loans will not have. Additionally, schools will use the information provided on the FAFSA to determine the eligibility for other kinds of financial aid assistance that could be provided by the federal government, from your state, or even from the school itself. This financial aid can include grants, scholarships and work opportunities.

The high cost of a law school education requires most law students to rely on educational loans such as financial aid to finance at least part of their studies. Although the best sources of information on possible funding are law schools themselves, I have put together some information to introduce you to the financial aid process and some of its resources that might be available for you. Remember, the earlier you begin researching possible student loan options and completing both your income tax return and other necessary forms, the more likely you are to secure the needed monies to further your education.

There will be several issues to consider before actually applying for financial aid.

• While federal student loan programs for students pursuing graduate and professional degrees do not need parental financial statements, law schools themselves will vary widely in the information they will use to compute financial aid packages. Many will request and require financial information from your parents or others who have provided support for you, even if you have been out of school and on your own for a while.
• Large amounts of consumer debt on credit cards, outstanding debts, or a bad credit rating may affect your ability to borrow the money needed.
• If you are planning to enter a low paying public interest legal job after completing your J.D., you may want to investigate student loan forgiveness programs at some law schools, which assist graduates who take such jobs in repaying law school educational student loans.

The application process for most forms of financial aid will begin with the Free Application for Federal Student Aid (FAFSA). This is available from any college financial aid office or online (fafsa.ed.gov/). You will have to complete your income tax return for the most recent year before you begin to fill out the FAFSA application. Some law schools may also require you and your parents to apply through the Access Group (accessgroup.org) or the College Scholarship Service Financial Aid Profile (collegeboard.com). These are need analysis services that will gather information to determine eligibility for institutional financial aid (scholarships and grants). In addition, some schools may have their own financial aid applications.

Need Based Aid

There are three types of student loans available through either the Federal Direct Student Loan Program (FDSLP) or the Federal Family Education Student Loan Program (FFELP):

1. Subsidized Federal Stafford Student Loan: Students with demonstrated financial aid need can borrow up to $8,500 per year; the federal government pays the interest while the student is in school.
2. Unsubsidized Federal Stafford Student Loan: Students are allowed to borrow up to a combined total of $18,500 in subsidized and unsubsidized student loans. Students may pay the interest or let it accrue while in school.
3. Perkins Federal Student Loan: This student loan is available to students at certain schools only, the amounts are determined by an individual basis and the federal government pays the interest while the student is in school.

All of these college student loans are offered under the same terms; Federal Direct student loans, however, are disbursed through individual law school financial aid offices instead of through banks or other traditional lenders.