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1. 2 3 Bill Mack Associate Director of Financial Aid University of Texas at Dallas.

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Presentation on theme: "1. 2 3 Bill Mack Associate Director of Financial Aid University of Texas at Dallas."— Presentation transcript:

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3 3 Bill Mack Associate Director of Financial Aid University of Texas at Dallas

4 4 Federal Insured Student Loans (FISL) Guaranteed Student Loan (GSL) Auxiliary Loans to Assist Students (ALAS) Supplemental Loan for Students (SLS) Federal Family Education Loan Program (FFELP) Robert T. Stafford Loan Program William D. Ford Federal Direct Loan Program

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6 6 Entrance Counseling First-time borrowers Inform them of their rights and responsibilities of taking out this loan Exit Counseling All borrowers that depart from your institution Graduate, withdraw, transfer, do not return

7 7 The school is required to notify the borrower within 14 or 30 days that a loan disbursement has been made and that the borrower may reduce or cancel the disbursement The school is required to notify the borrower within 14 or 30 days that a loan disbursement has been made and that the borrower may reduce or cancel the disbursement

8 8 Document executed by borrower, which spells out the terms & conditions of the loan disbursements, use and repayment Document executed by borrower, which spells out the terms & conditions of the loan disbursements, use and repayment If the note is for multiple loan periods and varying amounts, the school may elect to have the borrower use a If the note is for multiple loan periods and varying amounts, the school may elect to have the borrower use a Master Promissory Note

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10 10 Oldest active federal educational loan Institution administers this loan (Campus Based) Institution administers this loan (Campus Based) Previous allocations came from the Dept of Ed, now schools operate this loan from repaid funds Previous allocations came from the Dept of Ed, now schools operate this loan from repaid funds Fixed 5% interest rate Fixed 5% interest rate Repayment begins 9 months after student ceases to be enrolled at least 1/2 time Repayment begins 9 months after student ceases to be enrolled at least 1/2 time Minimum monthly payment is $30 Minimum monthly payment is $30 Maximum repayment term is 10 years Maximum repayment term is 10 years

11 11 Undergraduate annual limit $5,500 Underclassman (first two years) Aggregate limit $11,000 Undergraduate Aggregate limit $27,500 Graduate annual limit $8,000 Graduate Aggregate limit $60,000

12 12 Federal PLUS Loan is a loan for parents of dependent students Federal PLUS Loan is a loan for parents of dependent students Parent borrower is fully liable for loan Parent borrower is fully liable for loan FAFSA is required but is not based on need FAFSA is required but is not based on need Eligibility Eligibility Borrower must be the natural or adoptive parent of the student, or spouse of one of those people (step-parent can borrow if he/she is included in the FAFSA) Borrower must be the natural or adoptive parent of the student, or spouse of one of those people (step-parent can borrow if he/she is included in the FAFSA) Borrower must be a US Citizen or eligible non-citizen Borrower must be a US Citizen or eligible non-citizen Borrower must have no Title IV loans in default Borrower must have no Title IV loans in default Borrower must be credit worthy or have credit worthy endorser Borrower must be credit worthy or have credit worthy endorser

13 13 No Annual limit other that COA minus Aid No Annual limit other that COA minus Aid No Aggregate limit No Aggregate limit If the parent is not eligible the student may borrow a Stafford Loan using the independent student limits. If the parent is not eligible the student may borrow a Stafford Loan using the independent student limits.

14 14 Eligibility Eligibility Borrower must complete a FAFSA Borrower must complete a FAFSA Eligible graduate student attending at least half- time Eligible graduate student attending at least half- time Borrower must pass a credit evaluation or have an eligible “endorser”. Borrower must pass a credit evaluation or have an eligible “endorser”. Annual Loan Limit Annual Loan Limit COA minus other aid COA minus other aid No aggregate maximum No aggregate maximum 7.9 percent fixed interest. 4% Origination fee. 7.9 percent fixed interest. 4% Origination fee.

15 15 Eligible student in an eligible program at an eligible institution (per General Provisions) Eligible student in an eligible program at an eligible institution (per General Provisions) Enrolled at least 1/2 time Enrolled at least 1/2 time COA-aid= greater than zero COA-aid= greater than zero COA-EFC-aid=greater than zero for subsidized loan COA-EFC-aid=greater than zero for subsidized loan

16 16 Subsidized DL (-based) (Need-based)Interest: ED pays during ED pays during In-school In-school Deferment Deferment * Student pays during Repayment Repayment Unsubsidized DL (-based) (Non need-based)Interest: Student responsible for all Can be capitalized, or Can be capitalized, or Student can choose to pay interest while enrolled Student can choose to pay interest while enrolled

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18 18 As of July 1, 2012 Graduate students are no longer be eligible for subsidized Stafford Loans.

19 Combined Sub & Unsub Sub may not exceed Undergrad Dependent $31,000$23,000 *Undergrad Independent $57,500$23,000 Grad and Professional $138,500$65, * And dependent students whose parent was unable to obtain a PLUS loan.

20 20 When an undergraduate student’s academic program is less than 1 year in length and When an undergraduate student’s academic program is less than 1 year in length and When a student is completing a remaining period of enrollment that is less than one academic year When a student is completing a remaining period of enrollment that is less than one academic year Standard proration formula: Standard proration formula: Amount of Stafford Loan student could have for grade level ÷ 24 x number of enrolled hours Amount of Stafford Loan student could have for grade level ÷ 24 x number of enrolled hours

21 21 Perkins Loans – no fees Perkins Loans – no fees Fixed interest = 5% (no interest while enrolled or when in nine month grace period) Fixed interest = 5% (no interest while enrolled or when in nine month grace period) Direct Loans – 1% origination fee Direct Loans – 1% origination fee 0.5% rebate 0.5% rebate Undergrad sub = fixed interest of 3.4%, rising to 6.8% after July 1, Undergrad sub = fixed interest of 3.4%, rising to 6.8% after July 1, Unsubsidized = fixed interest of 6.8% Unsubsidized = fixed interest of 6.8% Direct Parent PLUS / Grad PLUS – 4% origination fee Direct Parent PLUS / Grad PLUS – 4% origination fee 1.5% rebate 1.5% rebate fixed interest = 7.9% fixed interest = 7.9% To retain rebates,1 st 12 payments must be on time

22 22 As of July 1, 2012 the borrower will be charged the full origination fee at disbursement. As of July 1, 2012 the borrower will be charged the full origination fee at disbursement.

23 23 Subsidized Stafford interest Subsidized Stafford interest 7/1/98-6/30/ or 1.76 (varies annually) 7/1/98-6/30/ or 1.76 (varies annually) 7/1/06-6/30/ fixed 7/1/06-6/30/ fixed 7/1/08-6/30/ fixed 7/1/08-6/30/ fixed 7/1/09-6/30/ fixed 7/1/09-6/30/ fixed 7/1/10-6/30/ fixed 7/1/10-6/30/ fixed 7/1/11-6/30/ fixed 7/1/11-6/30/ fixed 7/1/12- ? 6.8 fixed 7/1/12- ? 6.8 fixed

24 24 Federal education loans that may be consolidated Federal education loans that may be consolidated * FISL * FFELP * Direct Loans * National Direct Student Loans * PLUS * Perkins * Nursing Student Loan * Health Education Assistance Loan (HEAL)

25 25  Thirty-year repayment (maximum)  Interest rate will be a fixed interest rate, capped at 8.25%  A weighted average is used to figure the interest rate and then it is rounded up to the nearest 1/8 of a percent. * A consolidation loan can “cure” a defaulted federal student loan.

26 26 Interest rates are usually variable Interest rates are usually variable Origination and repayment fees vary Origination and repayment fees vary Co-borrower requirements (underwriting) Co-borrower requirements (underwriting) Most require school-certification Most require school-certification Cannot be discharged in bankruptcy Cannot be discharged in bankruptcy

27 27 International students International students SAP ineligible SAP ineligible Non-degree students Non-degree students Reached federal annual or aggregate maximum Reached federal annual or aggregate maximum

28 * Borrowing is bad * Borrowing a federal loans is bad but not as bad as some other loans * If a student can afford to attend college without loans he should do that * If a student must borrow to attend college she should borrow as little as possible. * We cannot control how much a student borrows * We are responsible when a student defaults on their federal loan

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