Wednesday, May 23, 2012


 
 


A Federal William D. Ford Direct Loan is a low-interest loan available to college students who are enrolled at least half-time, pursuing a degree, and meet other basic requirements. These loans do not require credit approval and offer a variety of deferment and repayment options. They are financed directly by the U.S. government so you do not need to choose a lender. There are two types of Federal Direct Stafford Loans: subsidized or unsubsidized.

A subsidized loan is awarded on the basis of financial need and grade level limits. The U.S. government pays (or subsidizes) the interest on this loan while you are enrolled at least half-time and during periods of deferment.

An unsubsidized loan is awarded regardless of need up to the amount of the Cost of Attendance and grade level limits. You are charged interest from the time the loan is disbursed and you may either make or defer interest payment while you are in school and during periods of deferment. If you defer you interest payments, the accumulated interest will be capitalized, or added, to the principal of your loan when you enter repayment. All future interest charges are based on the new, higher principal loan amount. It is less expensive over the long run if you pay the interest while you’re in school.

 

Loan Application Process: 

For the Student

  1. Students must file a current year FAFSA and the aid file must be completed, including verification if selected.
     
  2. Students must complete and sign the required undergraduate Direct Loan Master Promissory Note (MPN) at https://studentloans.gov.  We suggest reviewing the information in "What You Need" and "What to Expect" sections on the web before completing an electronic MPN.  The PIN issued by the Department of Education to sign the FAFSA is used to sign the MPN.  The MPN is not successfully completed if it cannot be viewed after clicking on the "Retrieve MPN" button.
     
  3. Students must complete a Loan Entrance Counseling Session for each academic year at https://studentloans.gov.  The session includes information on loan repayment obligations and the consequences of loan default.  Loan Entrance Counseling processes prior to July 1st of the current academic year will not be accepted.  (i.e. Loan Entrance Counseling for the academic year 2011/2012 may not be processed before July 1, 2011).
  4. Students who have already borrowed more than $20,000 must file a loan appeal prior to submitting a loan application.  Please see 'Loan Appeal Process' on this web page.
  5.  Loans are originated within 4-6 weeks of receipt of a completed and signed loan application form, and a valid government issued photo ID with clear photo
     
  6. Disbursement of loan funds depends on enrollment of at least 6 credits, no registration hold/block or financial hold/block, maintaining 30 day delay for first time borrowers. 

 Funds will disburse to students CSN accounts, pay any balances due, and generate any applicable refund within 10 business days. For faster and safer refunds, students may choose direct deposit through MyCSN.

 


Within 120 Days of Disbursement:

            Students have the right to cancel all or part of any disbursement of a William D. Ford Direct Loan without being charged interest and other loan fees as long as the cancellation is processed within 120 days of the original disbursement date. The disbursement date is the date the funds were disbursed to the CSN student account.
 
            To request a cancellation, students must provide a written statement reflecting the cancelled amount and the affected semester. The cancelled amount must be repaid by cashier's check, money order, or cash. Personal checks are accepted. 
 
More than 120 days After Disbursement:

            When cancelling all or part of any loan disbursement more than 120 days after it was disbursed to a students' CSN account, it constitutes repayment of part or the entire loan amount and you must pay any accrued interest and/or fees.

              The payment must be sent to Direct Loan Services (DLS); the address is available at   https:studentloans.gov.  If the payment is intended for a particular loan, it must be accompanied by specific instructions, such as, "Please apply this $1,000 payment to my unsubsidized loan first disbursed on 02/25/10, paying off any accrued interest and then applying any remaining payment to the principal of that loan.

    
            Payments made to DLS without instructions will be applied according to their business rules, which will usually pay down accrued interest and older loans before newer loans.
 
 


Loan Application Process: 

 
For the Student

Students must file a FAFSA for the current academic year and the aid file must be completed, including verification if selected.


For the Parent

The Direct Parent Plus Loan for the undergraduate student (PLUS) loan process at CSN begins after a student completes the Free Application for Federal Student Aid and the student’s file has been verified. This is done due to that credit checks are valid for only 90 days. To process a PLUS loan a parent needs to complete the following steps:

 
  1.  Complete the MPN and credit check at https:studentloans.gov. The MPN is valid for up to 10 years. The credit check must be done for each Parent Loan Request.
  2.  To receive a Parent Plus Loan for an undergraduate student,a parent needs to complete a Federal Direct Plus Worksheet and submit it to CSN Student Financial Services.
  3.  If a Parent Loan Request is denied due to adverse circumstances, the student may submit a(n) (additional) loan application with the Parent Plus Loan Request denial attached.  The student may be eligible for the funds based on remaining need up to the maximum loan amount for the year (up to the independent student limits) 
   


Alternative loans are not part of the Federal Student Loan Program.  They are private loans for educational expenses, administered, and processed by commercial lending institutions.  Since they are based on credit checks and generally do not offer the lower interest rates and/or variety of repayment options, they should be used only when all other options for financing education have been exhausted.

Students are free to choose any lender for the alternative loan.  The interest rates and repayment terms are different for each lender.  We strongly recommend that students do extensive research to ensure that their chosen lender best suits their needs and provides the lowest rates and most favorable repayment terms.

After choosing a lender, students must submit the Alternative Laon Certification Worksheet to SFS, and must be enrolled in at least 6 accredited degree seeking classes for certification of the loan.  The processing time is 4 - 6 weeks from receipt.

 
Suggested Research
  • Interest Rates – are based on credit score and may be capitalized more often, increasing the amount of money you ultimately owe. Using a cosigner may result in slightly lower rates.
  • Fees – are based on credit scores of lender and cosigner if students choose to use a cosigner, if applicable
  • Borrower Benefits –  vary by lender.
  • Repayment Terms – pay while enrolled, or deferment until after graduation.
  • Eligibility Requirements - what are the requirements for the loan?
  • Consolidation - can loans with different banks be considered into one when entering repayment?  Under which terms?
  
 Forms:

 

 

 CSN 2012 Summer Loan Application
 
 
 
   
 
 
 
 
What is a student loan?

A student loan is money you borrow for educational purposes that you must pay back with interest. The specific sum of money you borrow is called the principal. Interest is a percentage of the principal which you pay as a fee for borrowing. When it comes time to pay back the principal and interest you usually pay in monthly installments. If yo fail to repay (or default) the government may penalize you.
 
What kinds of loans are available?

All qualified financial aid students may borrow through the Direct Student Loan Program (which includes the Federal William D. Ford Direct Loans and the Federal Plus Loans). Federal William D. Ford Direct Loans allow the student to borrow money from the government to help pay for education costs. Under this program, the government will make a loan directly to you through the school. The Federal Stafford Loan Program includes Subsidized loans and Unsubsidized loans.
 
What is the difference between the two types of Federal William D. Ford loans?

A subsidized Federal William D. Ford loan is based on financial need. “Need” is determined by subtracting the Expected Family Contribution (determined by federal formula) and all other forms of aid from the Cost of Attendance (COA). The federal government pays the interest for you while you are enrolled in school at least half time; during the six-month grace period after you stop attending school at least half-time; and during periods of authorized deferment.
 
An unsubsidized Federal William D. Ford loan is not based on financial need and is available regardless of income. Because this loan is not subsidized by the government, you are responsible for all interest which accrues during in-school, grace and deferment periods. You may choose to make periodic interest payments to the government or opt to have the accrued interest capitalized (added on to) the principle loan amount.
 
What is the interest rate?

For subsidized loans made on or after: July 1, 2010 the interest rate is fixed at 4.5%. For unsubsidized loans at 6.8%.
                                                                 July 1, 2011 the interest rate is fixed at 3.4%. For unsubsidized loans at 6.8%
Are there any other costs associated with these loans?

The federal government charges Subsidized/Unsubsidized loan borrowers and origination fee of 1%. However, 0.5% of the fee is rebated up front when the loan is disbursed. When loan repayment begins, you must make the first 12 loan payments on time or the amount rebated will be charged back to the total loan amount.
 
How much can I borrow?
 
 
Maximum Annual Loan Limits Chart – Subsidized and Unsubsidized FFEL Stafford Loans
YEARS
 
DEPENDENT
UNDERGRADUATE
STUDENTS
 
 
 
INDEPENDENT
UNDERGRADUATE
STUDENTS
FIRST YEAR
 
$5,500-No more than $3,500 of this amount may be in subsidized loans.
 
$9,500 – No more than $3,500 of this amount may be in subsidized loans.
SECOND YEAR
 
$6,500-No more than $4,500 of this amount may be in subsidized loans.
 
$10,500 - No more than $4,500 of this amount may be in subsidized loans.
THIRD AND FOURTH
(Dental Hygiene Bachelor program only)
 
 
 
$7,500-No more than $5,500 of this amount may be in subsidized loans.
 
$12,500 - No more than $5,500 of this amount may be in subsidized loans.
MAXIMUM TOTAL DEBT FROM STAFFORD LOANS WHEN YOU GRADUATE
 
 
 
 
 
$31,000 - No more than $23,000 of this amount may be in subsidized loans.
 
 
 
$57,500 - No more than $23,000 of this amount may be in subsidized loans.
 
 
How is the money disbursed?

Your loan funds are sent in multiple disbursements, and are disbursed to your CSN student account. The first disbursement is usually made at the beginning of each semester. If the loan is for one semester, federal regulations require two disbursements to be made, usually at the beginning of the semester and half way through the semester. If you are a first time borrower (with less than 30 completed units), your first disbursement will be disbursed to your CSN student account 31 days after your initial semester starts. 
 
Who can apply for PLUS loans?

PLUS loans can be taken out by parents of dependent, undergraduate students enrolled at least half-time. You must have a complete financial aid file prior to your parent applying for the PLUS loan. Credit checks are done by the Department of Education on parents applying for PLUS loans. Your parent must meet citizenship requirement and cannot be in default or owe a refund on any Title IV program.
 
What is the interest rate for a Parent Plus loan?

For PLUS loans the interest rate is fixed at 7.9%.
 
Will CSN ever change the amount of loan I’m offered?

Specific reasons your loan might be adjusted include: additional awards not reflected in your original award, such as scholarships, awards from community organization or employers, Vocational Rehabilitation, tribal grants, or any other grants, etc., a change in Expected Family Contribution; or a change to less-than-half-time enrollment.
 
Can I postpone the repayment of my loan?

Yes, under certain conditions, you can receive a “deferment” or “forbearance” on your loan, as long as the loan isn’t in default. A deferment allows you to temporarily postpone payments on your loan. If you have a subsidized loan, you won’t be charged interest during the deferment. If you loan is unsubsidized, you’ll be responsible for the interest during the deferment. In that case, if you don’t pay the interest as it accrues, it will be capitalized and the amount you’ll have to pay will increase.
 
A forbearance is a temporary delay or reduction of payment when the borrower is willing, but unable, to pay the full payment. Interest continues to accrue during forbearance.
 
How will I repay my loan?

Repayment on a Direct Subsidized or Unsubsidized Loan starts six months after you graduate or cease to be enrolled at least half-time. You will make your payments to the federal Direct Loan Servicer.
 
When you leave school, you will select the repayment plan that fits your financial circumstances. You may switch repayment plans at any time without penalty by contacting Direct Loan Borrower Services Department.
 
The Standard Repayment Plan requires fixed monthly payment (at least $50) for up to 10 years.
 
The Graduated Repayment Plan allows payments to start at one level and increase every two years, with full repayment within 10 years.
 
The Extended Repayment Plan allows loan repayment to be extended up to a total of 25 years, depending on the total amount you owe when your loan enter repayment.
 
The Income Contingent Repayment Plan bases monthly payments on your yearly income, family size, and loan amount. As your income rises or falls each year, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.