Student Loans (terms)

Repayment period

The maximum time period you have to repay your federal student loan. The repayment period may be from 10 years to 30 years, depending on loan amount, loan type, and repayment plan.

Federal Perkins Loans

Who may receive this loan? Undergraduate and graduate or professional students with EXCEPTIONAL financial need What is the Current Interest Rate? 5.0% The government usually pays your interest (provides you an interest subsidy)... While you are enrolled at least half-time. For 9 months after you graduate or drop below half-time enrollment. During deferment periods. What are the current loan fees? N/A When am I required to begin making payments? 9 months after you graduate or drop below half-time enrollment

Interest accrual

# Direct Loans are "simple daily interest" loans. This means that interest accrues daily. # The amount of interest that accrues per day is calculated by dividing the interest rate on your loan (as a decimal) by the number of days in a year, and then multiplying that by the outstanding principal balance. <ex> On a $10,000 Direct Unsubsidized Loan with a 6.8% interest rate, the amount of interest that accrues per day is $1.86: (0.068 / 365) * $10,000 = $1.86

Types of Federal Student Loans

# Direct subsidized loans # Direct unsubsidized loans # Direct PLUS loans # Federal Perkins loans

Capitalized interest

# Unpaid interest that has been added to the outstanding principal balance of a loan. Interest is then charged on the increased outstanding principal balance and, under most repayment plans, will increase your monthly payment amount and the total amount you repay over the life of the loan. <ex> If you are in a DEFERMENT or FORBEARANCE for 6 months, the loan will accrue interest totaling $340. If you dont pay the interest, it is capitalized (added to the outstanding principal balance). You will be charged interest on the increased outstanding principal balance of $10,340. The amount of interest that accrues per day will increase to $1.93: (0.068 / 365) * $10,340 = $1.93 Under most repayment plans, this capitalized interest will increase your monthly payment and the total amount you pay over the life of the loan.

Master Promissory Note (MPN)

(aka. BORROWER'S RIGHTS AND RESPONSIBILITIES STATEMENT) A binding legal document that you must sign before you may receive a federal student loan. There is one MPN for Direct Subsidized/Unsubsidized Loans and a different MPN for Direct PLUS Loans. If you decide to return to school, contact your loan servicer to discuss use of your existing MPN. The MPN contains a Borrower's Rights and Responsibilities Statement that explains the terms and conditions of the loan(s) you receive.

Forbearance

A benefit of federal student loans that allows you to temporarily stop making payments OR reduce your federal student loans' monthly payment. Interest will continue to be charged on your subsidized, unsubsidized, and PLUS loans. Some forbearances are required to be granted by your federal loan servicer; others are offered only at the discretion of your federal loan servicer.

Disbursement

A portion of a loan that the school pays out by applying the funds to the student's school account or paying the borrower directly. Students generally receive their federal student loans in more than one disbursement.

Loan servicer/Federal loan servicer

Collects payments on a federal student loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a loan holder. A loan servicer performs all servicing tasks on behalf of the U.S. Department of Education.

Loan holder

Holds your loan promissory note and has the right to collect payments from you. For Direct Loans, your loan holder is the U.S. Department of Education. Throughout this counseling session, references to your loan servicer mean the loan servicer, federal loan servicer, or the loan holder.

Direct and FFEL Loans

Loans made under the William D. Ford Federal Direct Loan (Direct Loan) Program and the Federal Family Education Loan Program (FFEL Program) generally have the same terms and conditions. Depending on which loan program(s) the school(s) you attended participated in, you may have received Direct Loans, FFEL Loans, or both.

Student loan

Money you borrow for school and must repay with interest.

Interest

The cost to borrow money. Interest is calculated as a percentage of the outstanding principal balance.

Loan fee

A fee charged for each loan you receive that is a percentage of the total loan amount you are borrowing (gross amount). The loan fee reduces the amount you receive (net amount). You must repay the gross amount. You can find your loan fee amount in the disclosure statement you receive before the first disbursement of your federal student loan.

Federal Family Education Loan (FFEL) Program

Federal student loans borrowed through private lenders and guaranteed by the federal government. FFEL Loans include the following types of federal student loans: Subsidized Stafford Loans, Unsubsidized Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans. You repay your FFEL Loan to the lender, secondary market, guaranty agency or the U.S. Department of Education. Note: The FFEL Program ended June 30, 2010 and no new loans have been made under the FFEL Program since that date.

William D. Ford Federal Direct Loan (Direct Loan) Program

# Student loans provided by the U.S. Department of Education to enable a student to pay for education after high school. # Eligible students borrow directly from the U.S. Department of Education to attend participating schools. # Direct Loans include the following types of federal student loans: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. # You repay your Direct Loan(s) to the U.S. Department of Education through your federal loan servicer.

Acceleration

***Demand for immediate repayment of your entire federal student loan.*** This can happen when you default on your federal student loan. The entire unpaid amount of your federal student loan also becomes due and payable if you make a false statement that causes you to receive a federal student loan that you are not eligible to receive.

Deferment

A benefit of federal student loans that allows you to temporarily stop making payments. You're not generally charged interest on subsidized loans during deferment. Interest will continue to be charged on your unsubsidized loans and PLUS loans.

Principal

The loan amount plus any capitalized interest. During repayment, the principal is usually referred to as the outstanding (unpaid) principal balance.

Repayment

To pay back money you borrowed by making scheduled payments to the loan servicer.

Direct PLUS Loans

Who may receive this loan? Graduate or professional students and parents of dependent undergraduate students. An adverse credit history might affect your eligibility. More InformationModal What is the Current Interest Rate? Graduate/Professional Students 7.60% for loans with a first disbursement date on or after July 1, 2018 and before July 1, 2019 Parents of Dependent Undergraduate Students 7.60% for loans with a first disbursement date on or after July 1, 2018 and before July 1, 2019 You pay all interest during all periods. What are the current loan fees? Graduate/Professional Students 4.236% for loans with a first disbursement date on or after October 1, 2019 Parents of Dependent Undergraduate Students 4.236% for loans with a first disbursement date on or after October 1, 2019 When am I required to begin making payments? PLUS Loans enter repayment when they are fully disbursed (paid out), but your loan will be placed into deferment while you are in school at least half-time and for an additional 6 months after you graduate or drop below half-time status.

Direct Unsubsidized Loans

Who may receive this loan? Undergraduate students and graduate or professional students What is the Current Interest Rate? (Undergraduate Students) 5.05% for loans with a first disbursement date on or after July 1, 2018 and before July 1, 2019 (Graduate/Professional Students) 6.60% for loans with a first disbursement date on or after July 1, 2018 and before July 1, 2019 You pay all interest during all periods. What are the current loan fees? (Undergraduate Students) 1.059% for loans with a first disbursement date on or after October 1, 2019 (Graduate/Professional Students) 1.059% for loans with a first disbursement date on or after October 1, 2019 When am I required to begin making payments? 6 months after you graduate or drop below half-time enrollment

Direct Subsidized Loans

Who may receive this loan? Undergraduate students with FINANCIAL NEED What is the Current Interest Rate? 5.05% for loans with a first disbursement date on or after July 1, 2018 and before July 1, 2019 The government usually pays your interest (provides you an interest subsidy)... # While you are enrolled at least HALF-TIME . # During the grace period. # During DEFERMENT periods. # During certain periods of repayment under the Income-Based and Pay As You Earn Repayment Plans. Note: Direct Subsidized Loans with a first disbursement date after June 30, 2013 may be subject to subsidy loss under certain circumstances. More Information For Direct Subsidized Loans with a first disbursement date after June 30, 2012 and before July 1, 2014, you are responsible for paying the interest that accrues during the grace period. What are the current loan fees? 1.059% for loans with a first disbursement date on or after October 1, 2019 When am I required to begin making payments? 6 months after you graduate or drop below half-time enrollment