Financial Aid

With the rising cost of higher education, borrowing has become a vital tool for many students in financing their education. Obtaining a student loan is a serious legal obligation that will impact your future. Student loans can be used as a first step in establishing a good credit history that will be important to you later in life. Your student loan history could lead to your future borrowing for items such as a car, a house or even a business. It is critical that you take your borrowing responsibilities seriously because what you borrow now will affect your future lifestyle. Worcester State College offers a variety of need-based and non-need-based loans that will assist you in financing your education.

The first steps in borrowing student loans are planning for your education and managing your student loan debt. Of course the best sources of financing an education are grants or scholarships that do not have to be paid back. However, with increasing competition and limited number of dollars, often theses sources simply are not enough to cover all of your educational costs. This is where borrowing a student loan comes into the picture. As a student loan borrower, you have taken on a long-term commitment in order to further your education.

* The Student Loan Entrance Interview: First time borrowers must complete a federally mandated Student Loan Entrance Interview for Worcester State College.

* The Master Promissory Note (MPN): Prior to 1999, students signed a promissory note each year for their Federal Stafford Loans. Now, students may sign a MPN only once for up to ten years.

* The total amount of all of the types of student loans you take out each year: You should keep copies of your award letters and other loan documentation showing the amounts that you borrow each year and start a folder for all of your student loan records.

* The interest rates associated with each type of loan: You should know if your loan has a fixed or variable rate and you should understand your total interest charges. You should also know when you are expected to begin interest payments. Some loans that are not subsidized by the federal government require interest payments to begin right away

* Fees that will be charged for obtaining the loan: An origination fee is deducted from Subsidized and Unsubsidized Stafford Loans, and is used to pay the federal government for subsidizing the loan. A guarantee fee is deducted to pay the guaranty agency for insuring these loans. These fees are usually deducted directly from the principal of the loan before it is disbursed.

* The effects of loans on other financial aid: Your eligibility for other grants, work-study and/or scholarships should (and in some cases, must) be determined before receiving student loans.

* Deferments: During your in-school period, your loan may be deferred, often your lender will require you to complete a deferment form. The type and time of deferment will depend on the type of student loan you have obtained.

* Grace periods: If you have an unsubsidized loan and/or a loan that is subsidized by the federal government, you may be entitled to a grace period after you stop attending school at least half time. The length of your grace period will depend on the type of loan.

* The consequences of not repaying your student loan in a timely manner: The lender bills you as a courtesy; it is your responsibility to be certain that your payments are made on time. If you fail to make your payments on time, your lender may place you in delinquent status and eventually default status. This directly affects your credit rating and possibly your ability to get future financial aid.

* Forbearance: If you are unable to make your loan payments after getting out of school, you should contact your lender immediately. They may adjust your monthly payments for a period of time so that you can financially get on your feet again. It is critical that you contact your lender if this situation arises.

* Get to know Worcester State College's Satisfactory Academic Progress Policy. You are expected to maintain good grades in order to keep your financial aid.

* If you change your name, address, enrollment status or anticipated graduation date, you should notify both the financial aid office and the lender of your student loan(s).

* You may be eligible for an in-school deferment depending on the type of loan you received. Contact your lender or the financial aid office for more information and any necessary forms.

* Keep records of all of your student loan promissory notes, payments, and correspondence from your lender.

* You may prepay your loan(s) at any time without penalty. By prepaying, you reduce the total amount of interest you will have to pay back. Contact your lender for specific information.

* The Bursar's Office will refund any credit balance that exists on your student account provided that nothing is due at the time you request the refund. (Any change to your enrollment status and/or financial aid award after the refund occurs, may require a repayment to the college.)

* If you wish to cancel all or part of your loan(s), you must notify the school in writing and we will forward the request to your servicer and guaranty agency.

* You must attend an exit interview upon separating from school to receive important repayment information.

* If your lender does not contact you before the end of your grace period, be certain to contact them. Lenders bill borrowers as a courtesy; the loan is your responsibility to repay.

* Make all scheduled payments on time. If you cannot make a monthly payment on time or are experiencing financial difficulty, contact your lender immediately. They may be willing to arrange a deferment or forbearance agreement for you.

* Never ignore correspondence from you lender(s). Always open mail from them immediately.

* Apply for any deferments that you may be eligible for such as in-school deferments, Peace Corps deferments, unemployment deferments, military service deferments, etc.

* Take advantage of other repayment options such as graduated repayment, consolidation or prepayment. Contact your lender about these options.

These loan programs are awarded by the Financial Aid Office and include: Federal Subsidized and Federal Unsubsidized Stafford Loans, Federal Parent Loans, Federal Perkins Loans and Massachusetts No-Interest Loans.

Your student loan is a legal obligation. Failure to pay on time or failure to repay at all can result in serious consequences. Late payments will be reflected on your credit report. Default results when there is a chronic failure to make loan payments when due and it is reasonable to conclude that the borrower does not intend to honor the obligation of loan repayment, usually 270 days without payment.

* By failing to repay your student loan, you are depriving future borrowers of a limited funding source.

* Defaulted student loans are reported to national credit agencies and will remain on your credit record for at least seven years. This will impact your ability to borrow in the future.

* You will no longer be eligible for federal financial aid from any institution.

* Obtaining other types of federally subsidized loans, such as mortgages or small-business loans, may be difficult.

* Legal action may be taken against you, and part of your income or assets may be attached.

* Federal income taxes will be garnished and applied to the balance of the defaulted loan.

* Interest charges and late fees will continue to accrue. Attorney and collection fees may also be added to your loan balance.

* You will be ineligible for any future deferments or forbearance on a defaulted student loan.

* You may have difficulty qualifying for credit cards, mortgages, apartment leases, and auto loans.

Because there are so many repayment, deferment and forbearance options available today, there is no reason for anyone to go into default. If you are experiencing a financial hardship or unusual circumstances, or even if you are just going to be a few days late with a payment, contact your lender. Always read correspondence from your lenders and follow through with deferment or forbearance procedures as required. They do not want you to go into default. Most lenders will try diligently to assist you. However, since this loan is your legal obligation, you are ultimately responsible.

The Department of Education has created the position of Student Loan Ombudsman to help students to resolve their Federal Loan problems. Students should first attempt to resolve federal student loan problems through their lender, servicer, guarantor, or the financial aid office. Should all attempts to resolve problems through these channels fail, you may seek assistance from the U.S. Department of Education's Student Loan Ombudsman:

Phone

- 1-877-557-2575

Internet

- http://ombudsman.ed.gov

Mail

- Office of the Ombudsman

Student Financial Assistance

U.S. Department of Education

Rm. 3012, ROB #3

7th and D Streets, SW

Washington, DC 20202-5144

American Student Assistance (ASA) located in Boston has also created the position of Student Loan Ombudsman. To contact the ombudsman at ASA:

This applies to all loans with the exception of private and state loans such as MEFA, TERI, and MNIL. To resolve problems regarding these loans you can contact the Financial Aid Office or the originator of the loan.