Loans are money students or parents may borrow to assist in paying for college costs.
The Federal Financial Aid program is the largest lender of student loans. There are also private lenders as well. Student loan repayment usually begins after education is finished. It is helpful to look at loans as an investment in the future.
Federal Stafford Loans are federal loans available to degree-seeking undergraduate students enrolled at least half-time. Half-time at SU is defined as six credit hours for undergraduates. Stafford Loans are can be subsidized and/or unsubsidized. These loans are not credit-based and carry a current origination fee of 1.062%. The origination fee is deducted from the loan amount prior to its disbursal to the university. The Stafford Loan is borrowed directly from the U.S. Department of Education as part of the William D. Ford Direct Loan Program.
When do students pay back Stafford Loans? After students graduate, leave school, or drop below half-time enrollment, they will have six months before they must begin repayment of their loans. This period of time is called a grace period. Students are granted one grace period. Students may have longer than six months if they are on active duty in the military.
What are the types of Stafford Loans? There are two types of Stafford Loans, subsidized and unsubsidized.
A Subsidized Stafford Loan is awarded on the basis of financial need as determined by the FAFSA and SU. For Subsidized Stafford Loans disbursed before July 1, 2012, no interest will accumulate for the student prior to repayment of the loan or during authorized periods of deferment. The federal government will pay the interest during these periods. For Subsidized Stafford Loans disbursed after July 1, 2012, no interest will accumulate for the student while they are enrolled at least half-time or during authorized periods of deferment. However, interest will accrue during the grace period prior to repayment.
An Unsubsidized Stafford Loan is not awarded on the basis of financial need. Unlike a subsidized loan, interest will begin to accrue immediately from the time the loan is disbursed until it is paid in full. Students are permitted the option of paying the interest each quarter or deferring interest payments until they enter repayment. If the student allows the interest to accrue while they are in school or during other periods of nonpayment, it will be capitalized – that is, the interest will be added to the principal amount of the loan, and additional interest will be based on that higher amount.
Depending on a student’s financial need, their Stafford Loan could be a combination of both subsidized and unsubsidized.
What is the federal maximum an undergraduate student may borrow each academic year?
|Dependent Student||Maximum Direct Stafford Loan Amount|
|Freshman||$5,500 (Up to $3,500 of this amount may be subsidized)|
|Sophomore||$6,500 (Up to $4,500 of this amount may be subsidized)|
|Junior or Senior||$7,500 (Up to $5,500 of this amount may be subsidized)|
|Independent Student||Maximum Direct Stafford Loan Amount|
|Freshman||$9,500 (Up to $3,500 of this amount may be subsidized)*|
|Sophomore||$10,500 (Up to $4,500 of this amount may be subsidized)*|
|Junior or Senior||$12,500 (Up to $5,500 of this amount may be subsidized)*|
* Students whose parents are denied the Parent PLUS Loan are also able to borrow at this level.
What are the interest rates for Stafford Loans? The interest rate for all undergraduate Stafford Loans for the 2018-2019 year will be fixed at 5.045% for the life of the loan. The fixed interest rate for any loan borrowed for the 2019-2020 academic year will be set by July 1, 2019.
Federal Parent PLUS Loans are federal loans parents can borrow to pay for their dependent student’s educational expenses. Students must be considered a dependent by the FAFSA, be a degree-seeking undergraduate, and be enrolled at least half-time. Eligible parents who can borrow a PLUS Loan include a student’s biological parents, whether they were listed on the FAFSA or not, and stepparents whose income was reported on the FAFSA. Parents must also pass a credit check in order to be approved for this loan.
Parent PLUS Loans currently carry an origination fee of 4.248%. The PLUS Loan is borrowed directly from the U.S. Department of Education as part of the William D. Ford Direct Loan Program. Parents may borrow for each year of their student’s undergraduate career, though subsequent credit checks will be required. Credit checks are valid for up to ninety days.
What is the interest rate for Parent PLUS Loans? The interest rate for the 2018-2019 Parent PLUS Loan is fixed at 7.595% for the life of the loan. The fixed interest rate for any loan borrowed for the 2019-2020 academic year will be set by July 1, 2019.
When do parents begin repaying a Parent PLUS Loan? Parents are given two options in repaying the Parent PLUS Loan. Typically, repayment begins within sixty days after the final loan disbursement for the academic year the loan was borrowed. For most parents, this will occur in March of the spring semester. Alternatively, parents can choose instead to defer loan repayment until after their student graduates or drops below half-time enrollment. Interest will still accrue and parents will be given the option of paying or capitalizing the interest. Regardless of the repayment option the parent selects, interest begins to accumulate at the time the first disbursement is made.
A Federal Nursing Student Loan is a 5% interest loan for students who are enrolled at least half-time in the Bachelor’s in Nursing program who demonstrate exceptional financial need. Please contact the Office of Financial Aid for more information.
When do students pay back Nursing Student Loans? If a student is attending school at least half-time, they have nine months after they graduate, leave school or drop below half-time status before they must begin repayment. Students may have longer than nine months if they are on active duty in the military. At the end of the grace period, students must begin repaying their loans. Students may be allowed up to 10 years to repay.
Alternative/private student loans are outside funds borrowed from a bank or lending institution and not part of the Federal Student Aid Program. Accordingly, it is not necessary to file a FAFSA or other federal forms in order to receive these loans. Many students and parents opt for these loans when they are looking for more flexible repayment options than those available with federal loans, such as placing the loan in the student’s name. Though these are non-federal loans, most lenders will require the Office of Financial Aid to certify the student’s enrollment and eligibility. Accordingly, we will not certify a private loan which exceeds our estimate for the student’s educational expenses. Federal financial aid regulations also require Shenandoah University to include private educational loans as part of a student’s financial aid package. As a result, a private loan may reduce the amount a student or parent could receive in other forms of financial aid, regardless if Shenandoah University certified the loan or not. Conversely, the amount Shenandoah University could certify for a private loan could be limited by the other aid the student is receiving. Some things to keep in mind when considering a private loan:
Borrower/Cosigner Responsibility: In borrowing a private loan, the student is often responsible for repayment; as opposed to the Parent PLUS Loan, where it is the parent’s responsibility to repay the loan. However, lenders of private loans will often require a parent or another party to cosign the loan for their student, making that individual responsible for repayment if the student defaults on the loan. Cosigning also means the loan will appear on the cosigner’s credit history in addition to the student’s
Interest Rate: The interest rates on private loans are typically based on the current prime/LIBOR rates and are variable. Often the lender will base the interest rate upon the credit score and history of the borrower or cosigner.
Looking for a Private Lender? FastChoice provides information about private loans in an easy-to-understand format to help students determine which private student loan best meets their needs – FastChoice
At Shenandoah we understand that Financial Aid is an important, and sometimes confusing, factor in your college search process. We are here to help you understand your Shenandoah University financial aid package and financial options. Contact the Office of Financial Aid.