Basic Loans

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Basic Loans

• Dave Clevenger
• University of Northwestern Ohio

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Basic Loans

• Types of Student Loans
• Loan Eligibility Requirements
• Application Process
• Calculating Eligibility Amounts
• School Certification
• Following Up

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What are Student Loans?

• Loans are a resource for students to use to help
  cover costs that may not be fully covered with
  Grants and/or Scholarships
• Loans can help students cover not only tuition
  costs, but also living expenses such as housing,
  food, transportation, ect. (Educational related
  expenses)

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Types of Student Loans Federal

• Federal Stafford Subsidized
• Interest paid while student is in school
• Interest rate 6.0 Fixed beginning July 1, 2008
• Payments deferred 6mo. after graduation or
  withdrawal
• Federal Stafford Unsubsidized
• Interest rate 6.8 Fixed
• Payments deferred 6mo. after graduation
  or withdrawal

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Types of Student Loans Federal

• Federal Direct Subsidized
• Interest paid while student is in school
• Interest rate 6.0 Fixed beginning July 1, 2008
• Payments deferred 6mo. after graduation
• Federal Direct Unsubsidized
• Interest rate 6.8 Fixed
• Payments deferred 6mo. after graduation

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Types of Student Loans Federal

• Federal PLUS (Parent Loan)
• Interest rate 8.5 Fixed
• Repayment begins 60 days after final disbursement
• Perkins
• Interest rate 5.0
• Loan forgiveness options available

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Types of Student Loans Private

• Many different Private/Alternative student loans
• Interest rate may vary depending on credit
• Usually variable rate
• Some require school certification, others do not
  require certification
• A school may not be aware that a student is using
  this type of loan when it doesnt require school
  certification

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Loan Eligibility Federal Stafford and PLUS

• Must complete FAFSA Form (Stafford Loan)
• May not be in default on a Federal Student loan
  or owe a repayment to a grant program
• Maintain Satisfactory Academic Progress
• Must not have borrowed in excess of Annual or
  Aggregate loan limits

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Loan Eligibility Federal Stafford

• Eligible for amounts up to
• 3500 First year
• 4500 Second year
• 5500 Third/Fourth Year
• Additional Unsubsidized for Dependents (July 08)
• 2000 for Undergraduate

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Loan Eligibility Federal Stafford

• Additional Unsubsidized for Independent Students
  (or Students with PLUS Denials)
• 6000 First/Second Year (July 08)
• 7000 Third/Fourth Year (July 08)

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Loan Eligibility Federal Stafford

• Aggregate Loan Limits (July 08)
• Undergraduate Dependent
• 23,000 Subsidized
• 31,500 Combined
• Undergraduate Independent
• 23,000 Subsidized
• 57,500 Combined
• Graduate/Professional
• 65,500 Subsidized
• 138,500 Combined

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Loan Eligibility PLUS

• FAFSA form is not required for the PLUS loan
• Eligibility for the PLUS loan can be up to the
  Cost of Attendance minus other Financial Aid
• Parent must meet the credit criteria
• If a parent is denied the student is eligible
  for additional unsubsidized loans

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Loan Eligibility Private/Alternative

• Must be degree seeking
• Must be making progress toward a degree (may not
  necessarily mean meeting SAP)
• Must meet credit criteria
• Credit criteria may not always be the same when
  compared with other private loans

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Loan Eligibility Private/Alternative

• Eligibility for the Private/Alternative loan can
  be up to the Cost of Attendance minus other
  Financial Aid
• FAFSA form is not required for Private Loans

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Loan Eligibility Perkins

• FAFSA form is required
• Student may borrow up to 4000 per award year
• Priority given to Students with exceptional need

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Application Process Stafford

• Students must sign Master Promissory Note
• MPN is good for up to 10 years
• Borrowers can apply directly with Lender/Servicer
  through borrower initiated process
• School can send application requests to
  lender in a school initiated process

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Application Process Stafford

• FAFSA form does not have to be complete to sign
  MPN, it will however need to be complete to
  receive a disbursement from the loan
• Direct loan applications may need to be obtained
  through the school and student must sign an eMPN.

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Application Process PLUS

• Parents must apply and sign an MPN
• MPN is good for up to 10 years
• Must pass credit criteria
• A student whos parents are denied a PLUS loan
  due to credit reasons are eligible for additional
  Stafford Unsubsidized loans

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Application Process PLUS

• Parents can apply directly through
  Lender/Servicer or through the School

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Application Process Private

• Generally a student must initiate the process
  with the Lender/Servicer
• Student must sign an Application or Promissory
  note which must be completed for each new loan
• Currently no MPN is available for
  Private/Alternative loans

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Application Process Private

• Student and Co-signer must meet credit criteria
  (may differ somewhat between lenders)

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Application Process Perkins

• FAFSA is the application
• Student eligibility and amount is determined by
  the school

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Calculating Eligibility

• Cost of Attendance includes tuition and fees,
  room and board, supplies, transportation and
  personal expenses (all related to education).
• EFC from the FAFSA
• Financial Aid such as grants, scholarships, or
  other outside resources (BVR, VA)

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Calculating Eligibility Stafford

• If need exceeds subsidized amounts for a
  students grade level you may only certify up to
  the eligible amount for the students grade level
• If need is less than the subsidized eligibility
  for the grade level then the remaining portion of
  the maximum loan eligibility would be unsubsidized

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Calculating Eligibility Stafford (Dependent
Students)

• Beginning July 1, 2008 dependent students are
  also eligible for an Unsubsidized loan in the
  amount of 2000
• If a students parent has been denied for a PLUS
  loan the student is eligible for an additional
  unsubsidized loan in the amount of 4000 which
  would bring the total Unsubsidized eligibility to
  6000

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Calculating Eligibility Stafford (Independent
Students)

• Beginning July 1, 2008 independent students are
  eligible for an Unsubsidized loan in the amount
  of 6000

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Calculating Eligibility PLUS

• Students are eligible for a PLUS loan up to the
  remaining unmet Cost

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Calculating Eligibility Private/Alternative

• Students are eligible for a Private/Alternative
  loan up to the remaining unmet Cost

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Calculating Eligibility Perkins

• School awards Perkins based on exceptional
  Financial need
• School must have a written policy on how Perkins
  loan funds are awarded to students
• Limited funds once school has exhausted funds
  late filers may not be eligible for Perkins

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School Certification Stafford

• Once the school has determined eligibility for
  the Stafford loan it must be certified with the
  Guarantor/Servicer
• The school must define the loan period and
  disbursement dates
• The school must certify that the student is
  enrolled or plans to be enrolled at least
  half-time

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School Certification Stafford

• The school must provide the students Grade level
  and Graduation date
• The school is also certifying that the student is
  in an eligible program of study
• Loan must be certified before the end of the loan
  period or before the student ceases at least
  half-time enrollment
• School also certifies that the student
  is meeting SAP standards

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School Certification PLUS

• Once the school has determined eligibility for
  the Stafford loan it must be certified with the
  Guarantor/Servicer
• School must define the loan period and
  disbursement dates
• Must certify that the student is enrolled or
  plans to be enrolled at least half-time
• School certifies the student is meeting
  SAP standards

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School Certification PLUS

• School does not have to perform a need analysis,
  but does need to subtract Stafford loan
  eligibility (SFA handbook Chapter 6, 3-103)
• Best to certify the PLUS loan with a loan period
  that matches the Stafford loan and other FSA funds

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School Certification Private

• School does not have to perform a need analysis,
  but should subtract Stafford loan eligibility
• Student should be enrolled at least half-time
  (some lenders may not require at least half-time
  enrollment)
• Student should be making progress toward their
  degree

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Following Up Stafford

• School must notify lender of a change in
  eligibility
• Change in enrollment status
• No longer meeting SAP
• Eligibility change due to additional Financial
  aid awarded or a change due to verification

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Following Up Stafford

• A School may not have loan funds delivered
  earlier than 13 days before the beginning of the
  loan period
• Any credit balances must be delivered to the
  student no later than 14 days from the
  disbursement
• The school must notify the student of the loan
  disbursement and their right to
  cancel within 14 days

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Following Up Stafford

• If a student withdraws or does not enroll for the
  period in which the loan was intended, the funds
  must be returned to the lender within 13 business
  days of receipt
• A student who withdraws during the period of
  enrollment must have an R2T4 calculation done and
  any unearned funds must be returned within
  30 days

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Following Up Stafford

• Students who withdraw, graduate or cease at least
  half-time enrollment are required to complete an
  Exit Interview
• May use electronic means
• Must take reasonable steps to ensure that the
  student receives, participates and completes exit
  counseling (Common Manual Appendix 8 pg 51)

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Following Up PLUS

• A School may not have loan funds delivered
  earlier than 13 days before the beginning of the
  loan period
• Any credit balances must be delivered to the
  parent no later than 14 days from the
  disbursement
• The school must notify the parent of the loan
  disbursement and their right to
  cancel within 14 days

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Following Up PLUS

• If a student withdraws or does not enroll for the
  period in which the loan was intended, the funds
  must be returned to the lender within 13 business
  days of receipt
• A student who withdraws during the period of
  enrollment must have an R2T4 calculation done and
  any unearned funds must be returned within 30
  days

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Following Up Private

• School must notify lender of a change in
  enrollment status
• In the event the student withdraws during the
  period of enrollment, Private loan funds do not
  use the R2T4 calculation
• If the student was enrolled at the time of
  disbursement he or she is eligible for the
  funds

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• Questions?

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Dave ClevengerUniversity of Northwestern
Ohio419-998-3190dcleveng_at_unoh.edu
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