|
|
|
Federal
and State Student Loan Programs Stafford
Loans PLUS
Loans Perkins
Loans MNIL Loans United
States Army Loan Repayment Program Return
to Guide to Student Loans Federal
Family Education Loan Program What
is a Federal Stafford Loan? Federal
Stafford Loans are the most common type of student loans currently available.
Stafford Loans are low-interest, federal loans made widely available to students
attending school at least half time. These loans are offered by lenders
such as banks and credit unions and are insured by guaranty agencies such as American Student Assistance. There
are two types of Stafford Loans: the Federal Subsidized Stafford Loan and the
Federal Unsubsidized Stafford Loan. Students with financial need may
qualify for the Subsidized Stafford. However, students may be eligible for
the Unsubsidized Stafford Loan regardless of financial need. It is also
possible for a student to have a combination of these loans. The
major difference between the Subsidized Stafford Loan and the Unsubsidized
Stafford Loan is that the federal government pays all of the interest on the
subsidized loan while the student is still enrolled in college at least half
time. The federal government does not pay the interest (which begins to
accrue immediately) on the Unsubsidized Stafford Loan, so the student is
responsible for those interest payments. What
is the interest rate on a Federal Stafford Loan? If
your loan was disbursed on or after July 1, 1994 and this is your first Federal
Stafford Loan (and you have no other outstanding Federal PLUS, Federal SLS or
consolidation loans), your interest rate will be variable from year to year, but
will never exceed 8.25 percent. Variable
rates are set each year in June. Your lender or servicer will notify you
of interest rate changes. If
your first Federal Stafford Loan was disbursed before July 1, 1994, check with
your lender to determine the interest rate that applies to you. What
are the fees charged for a Stafford Loan? Most
Federal Stafford Loans charge two types of fees. The first is an
origination fee of not more that 3 percent, which is paid to the federal
government for subsidizing the loan. This amount will be deducted directly
from each disbursement made to you. The guaranty agency may also assess up
to a 1 percent of the principal of the loan as a guarantee gee, which will be
deducted from the disbursement of the loan. When
do I begin repaying this loan? For
a Subsidized Stafford Loan, repayment begins six months after you either
graduate, withdraw, or drop below half-time enrollment status. This period
of time is called a grace period. You are not responsible for any
principal or interest payments until the grace period expires. If you have
an Unsubsidized Stafford Loan, you are responsible for the interest
payments from the date the loan is disbursed. You have two payment options
with respect to this loan. You can chose to pay only the interest or pay
nothing and capitalize the interest. You will indicate whether you want to
pay interest during school or let it accrue and capitalize when you complete
your Stafford Loan Master Promissory Note (MPN). What
are the costs of capitalizing my loans? By
choosing to capitalize interest payments on an unsubsidized loan, the principal
balance of your original loan will increase each time the lender capitalizes the
loan. Also, the total amount of interest that you end up repaying
dramatically increases. When you leave school and begin repaying your
loan, your monthly payment will be higher than if you had chosen to pay the
interest while in school. This chart compares the monthly payments on Unsubsidized Stafford Loans where interest is paid while the borrower is in school and loans when the interest is capitalized. This example uses the maximum interest rate for Stafford Loans, 8.25 percent. This is an estimate only. The actual interest capitalized will depend on factors such as disbursement date, number of disbursements, and the variable interest rate.
What
happens if my loan is sold or transferred? Most
lenders sell their loans or have an outside agency do their billing.
Should the ownership of your loan be transferred, you will be notified of the
name, address, and telephone number of the new holder of the loan. Sale or
transfer of the loan does not affect you rights and responsibilities. Several
secondary lenders offer special incentives for students who continue to make
payments on time for a period of time How
much time will I have to pay each month? The amount of your monthly Stafford Loan payment when you begin repayment depends on the total amount that you borrow. Your minimum payment will be at least $50 but could be more. You can estimate you approximate monthly payments based on the amount that you borrow by using the following chart.
Lenders
may also be willing to work out special repayment arrangements based on a
graduated schedule which lets you make smaller payments early in your repayment,
then gradually increases as your income is expected to increase. There
is also the option to CONSOLIDATE your loans. This lets you combine
Subsidized and Unsubsidized Stafford Loans, Perkins Loans and some other types
of federal student loans into a single loan. However, before you consider
this option you should realize that your length of repayment may increase to 20
years and your interest rate may increase to 8.25 percent or change to the
weighted average of the interest rates of the loans being consolidated,
whichever is greater. In other words, consolidation can be a more costly
option. Can
I defer my Stafford Loan? Stafford
Loans have several deferment options. These are some of the deferments
available: *
Full-time study at a school participating in the Federal Family Education Loan
Program or half-time course of study. (You may have to obtain a Federal
Stafford Loan for that period of time - check with your lender.) *
Full-time study in an eligible graduate or fellowship program. *
Full-time participation in an approved, designated rehabilitation program. *
If you are unable to find full-time employment, you may be granted a deferment
for up to three years. *
If you are experiencing an economic hardship, you may be eligible for a
deferment for up to three years. *
If you are a member of the reserve component of the Armed Forces and are called
to active duty for more than 30 days. In
order to obtain a deferment, contact your lender for the appropriate forms.
They will indicate who needs to certify your current status. You may have
to re-certify your deferment status each semester or on a regular periodic
basis. Be certain to get clarification from your lender about this
requirement. What
if I am not eligible for a deferment? In
certain cases when you cannot make your payments but are not eligible for a
deferment, your lender may allow you to enter into forbearance. Your
lender will make arrangements to either temporarily reduce or postpone your
payments. If you are having difficulty making your loan payments, you
should contact your lender immediately. Is
there loan forgiveness for teachers? Federal
Stafford Loans of up to $5,000 for a NEW (loans received after 10/7/98) borrower
may be forgiven as long as the borrower: *
Has been employed as a full-time teacher for five consecutive, complete school
years; and *
Is not in default on a loan for which he/she seeks forgiveness. What
is a Federal PLUS Loan? Federal
PLUS Loans allow parents of dependent, undergraduate students to borrow funds up
to the student's cost of attendance minus any other financial aid. This
often provides a necessary supplement to cover a student's educational costs. What
is the interest rate on a Federal PLUS Loan? For
PLUS Loans first disbursed on or after July 1, 1994, the interest rate is
variable but will not exceed 9 percent. If your parents have a prior PLUS
Loan, check with your lender to see what the interest rate will be. When
does repayment begin? Repayment
usually begins within 60 days after the loan in disbursed. If your parents
are eligible for a deferment (check with your lender to see if they are), They
will not begin repaying the principal on the loan until the deferment ends. What
is a Federal Perkins Loan? Federal
Perkins Loans are low-interest, federally funded student loans for students with
financial need. Perkins Loan are issued through the financial aid office
through the regular financial aid award process. How
will I receive this money? At
the beginning of each semester, the financial aid office will contact you to
come in to sign your promissory note. First-time borrowers must attend an
entrance interview during which they will sign their note and receive additional
Perkins Loan information. By signing the promissory note, you agree to
repay the loan. After the note is signed, half of your total award will be
credited to your account in the Bursar's Office. What
is the interest rate on a Federal Perkins Loan? A
annual rate of 5 percent of the principal balance is charged for a Perkins Loan,
from the beginning of the repayment period. When
do I begin repaying this loan? When
you graduate, withdraw, or drop below half-time status, you have a nine-month
grace period before you begin repayment of your Federal Perkins Loan. At
the end of your grace period, you must begin repaying your loan and you will
have up to ten years to repay. There is no penalty if you repay your loan
before the grace period expires. Also, any payments made during your grace
period are credited entirely toward the principal balance of the loan and will
help minimize the amount of interest you will have to pay on this loan. How
much will I have to pay each month? Depending on the total amount of the money you borrow, the minimum monthly payment on your Perkins Loan will be at least $40. The more you borrow, the higher your payments will be. You can estimate your monthly payments based on the total amount you borrow. If you are having difficulty making your monthly payment on time, contact the financial aid office immediately.
Can
I defer my Federal Perkins Loan? There
are several deferment provisions for this loan. Upon making a properly
document written request to Worcester State College, you may defer your loan for
the following reasons: *
At least half-time enrollment as a regular student at an eligible institution. *
Enrollment as a regular student in a graduate or fellowship program. *
Enrollment in an approved rehabilitation training program. *
Approved economic hardship or approved period of unemployment. *
If you are a member of the reserve component of the Armed Forces and are called
to active duty for more than 30 days. Are
there any cancellation provisions for this loan? There
are several cancellation provisions for the Federal Perkins Loan Program as
described below. All request for cancellation must be properly document in
writing. *Teaching
cancellations: If you are a full-time teacher at a school designated by
the Secretary of Education. *
If you become a full-time law enforcement officer or full-time corrections
officer at an eligible facility. *
As a full-time nurse or medical technician providing health care services. *
If you become a full-time employee of an eligible child or family service
agency. *
As a full-time staff member of an eligible Head-Start agency. *
If you serve as a volunteer in the Peace Corps or certain other volunteer
agencies as approved, you will be entitled to a partial cancellation of this
loan. *
In the event of your death or if you become permanently and totally disabled,
your loan will be cancelled. All
borrowers (including previous borrowers) are eligible for any authorized current
deferment or cancellation provisions described above. Previous borrowers
also are eligible for any additional provisions contained under an existing
promissory note. Massachusetts
No-Interest Loan Program (MNIL) What
is a Massachusetts No-Interest Loan? The
Massachusetts No-Interest Loan (MNIL) is a state-sponsored, long-term
undergraduate student loan for Massachusetts residents with financial need.
MNIL loans are awarded by the financial aid office following the award
guidelines designated by the Board of Higher Education's State Office of Student
Financial Assistance. What
is meant by No-Interest Loan? Just
as the name implies, this loan is offered to you at no interest rate. This
means that you only have to repay the principal balance that you borrowed.
Be aware, however, that if you fail to make scheduled payments on time, late
fees may be assessed. Who
qualifies for a Massachusetts No-Interest Loan? Eligibility
for a MNIL is determined by the Massachusetts Office of Student Financial
Assistance (OSFA) and is based on the results of your FAFSA application.
OSFA provides the financial aid office with a roster of eligible students.
The student's name must appear on this roster before processing may occur. How
will I receive the funds from this loan? If
you are offered (and accept) a No-Interest Loan your promissory note will be
prepared for you, and you will be notified that the promissory note is available
for your signature at the financial aid office. You must report to the
financial aid office within two weeks to sign your note and complete an entrance
interview, at which time additional information regarding the MNIL will be
presented to you. Completed
promissory notes are forwarded to EFG Technologies where they are processed for
payment. EFG verifies to OSFA that the required paperwork has been
completed and authorizes payment to be made. Funds are disbursed directly
to your student account in the Bursar's Office. Processing time from the
date of the signing to disbursement is approximately four to six weeks. When
does repayment begin? Borrowers
are granted a six-month grace period beginning at either graduation, withdrawal
from school, or at the point you drop below half-time enrollment status.
At the end of the grace period, you must begin making scheduled payments. How
much will I have to pay back each month? At the time you leave school or shortly afterward, you will receive a repayment schedule. You will be expected to pay a minimum $50 per month; however, your payments could be higher depending on the total amount you borrow. You have a maximum of ten years to repay this loan.
Can
the Massachusetts No-Interest Loan be deferred? Borrowers
may have this loan deferred for specific period provided they supply the
necessary documentation to the Massachusetts Office of Student Financial
Assistance. Deferments are available for the following: *
At least half-time enrollment in an eligible degree or certificate program *Hardship
due to unemployment, long-term illness, disability or other extenuating
circumstances. *
Service in the U.S. Armed Forces, the commission corps of the U.S. Public Health
Service, or active duty member of National Oceanic and Atmospheric Corps. *
Volunteer service in the Peace Corps, ACTION Programs, or other comparable
service in volunteer work for specified tax-exempt organizations. United
States Army Loan Repayment Program On
October 1, 1982, the Federal Government was empowered to repay student loans
incurred by qualified active Army and Army Reserve enlistees under the Stafford
and Perkins Loan programs in return for military service. If you enlist in
the U.S. Army after graduation you may be eligible to receive repayment
assistance. For a four-year enlistment in a selected skill in the active
Army, up to $65,000 in repayment assistance may be available. For
enlistment in the Army Reserve, up to $20,000 may be available. Contact the
nearest Army Recruiting Office for further details Return
to Guide to Student Loans
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Financial Aid Office | 508.929.8056 | |
