NAFSAA Credential Direct Loans
. A nonstandard-term program has terms that are substantially equal in length when
no term is more than two weeks of instructional time longer than any other term in the program
Repayment officially begins
on the date the loan is fully disbursed—that is, when the final disbursement on the loan is delivered to the borrower. Typically, the first payment is due within 60 days, even if the borrower is still enrolled.
For student PLUS borrowers
repayment is deferred automatically while the student remains continuously enrolled at least half time, and for an additional six months after the student graduates, leaves school, or drops below half-time enrollment.
Repayment begins
six months after the student ceases to be enrolled at least half time
Direct PLUS Loans Interest accrues from
the date of disbursement and during periods of deferment and forbearance.
A fixed interest rate means
the interest rate on a loan will not change for the life of that loan.
Semester Minimum Requirement
24 credit hours/ 30 weeks
Title IV academic year
26 weeks and 182 days
If the published length of the student's current academic program is 22 months, what is the student's maximum eligibility period for a subsidized loan while enrolled in that program?
33 Months
Quarter Minimum Requirement
36 credit hours/ 30 weeks
Clock hour Minimum Requirement
900 clock hours 26 weeks
What does "capitalization of interest" mean?
Accrued interest is added to the principal balance of the loan, and the borrower must then repay the resulting increased loan amount plus any new interest that accrues on that amount
does not begin and end at the same time each year; it floats with the student's enrollment pattern.
Borrower-Based Academic Year Rules
A nonterm program can be offered in
Credit hours or clock hours
Which programs are always considered EFA?
Federal Pell Gran
For Direct Loans first disbursed on or after July 1, 2013, the interest rates are
Fixed
A minimum of 26 weeks of instructional time during which a full-time student is expected to complete a minimum number of clock hours defined by the school
Graduate and professional clock-hour programs
A minimum of 30 weeks of instructional time during which a full-time student is expected to complete a minimum number of credit hours defined by the school
Graduate and professional credit-hour programs
A supplemental loan can be processed if the borrower
Has remaining eligibility (for example, she did not borrow the maximum amount when the original loan was processed for the SAY or BBAY, or changes from dependent to independent)
What is the difference between a need-based loan and a non-need-based loan?
It's important to remember the equation for need—that is, COA minus EFC equals need. For a student to receive a need-based loan, the student must have a remaining unmet need amount to finance his or her education after the COA and the EFC are taken into account. The EFC of the student is not taken into account when applying for a non-need-based loan; as long as the amount does not exceed the COA minus the EFA received, the student is eligible.
Borrowers have two options for handling interest on unsubsidized loans:
Pay interest while enrolled and during periods of grace or deferment, or 2. Allow the interest to capitalize, which means it is added to the principal balance of the loan
A supplemental loan can be processed if the borrower
Progresses to a grade level with higher loan limits during the SAY or BBAY
Maximum eligibility period - Total subsidized usage periods
Remaining eligibility period
The concept of a _______ only to certain term-based credit-hour programs that use or are offered in a traditional academic year calendar
Scheduled Academic Year Rules
A subsequent loan which supplements the initial loan for the SAY or BBAY in programs for which academic progression for annual loan limits purposes is measured by the number of terms in the program's SAY or BBAY
Supplemental Loans
When calculating subsidized loan eligibility, EFA does not include amounts used to offset the EFC, such as
TEACH Grants; • IASGs; • Direct Unsubsidized Loans; • Direct PLUS Loans; • Private (nonfederal) and state-sponsored loans; • Federal Work-Study (FWS) funds the student has declined;
. Why is it important that the EFC align with the loan period?
The EFC should align with the loan period to ensure that the student is being evaluated for loans and other federal student aid based upon the proper amount of need
A variable rate of interest
The interest rate is adjustable throughout the term of the loan. Will be lower than fixed rate to begin with, but changes with the economy
What is the minimum loan period for a program of study offered in clock hours?
The minimum loan period is the lesser of the length of the student's program, the program's academic year, or the remaining length of the student's program
The first step in the Direct Loan application process is filing the FAFSA
True
The subsidized usage period is the period of time for which a first-time borrower receives a subsidized loan. It does not include periods when the borrower doesn't receive a subsidized loan.
True
A minimum of 26 weeks of instructional time during which a full-time student is expected to complete at least 900 clock-hours
Undergraduate clock-hour programs
A minimum of 30 weeks of instructional time during which a full-time student is expected to complete at least 24 semester or trimester hours or 36 quarter hours
Undergraduate credit-hour programs
A school may opt to use a BBAY for a credit-hour program offered in a scheduled academic year format in which of the following situations?
Uniformly for all students, Only for students in certain academic programs, On a student-by-student basis
What are the two situations that may warrant a student completing more than one MPN?
1) The student transfers to another school that is not eligible or chooses not to use the MPN multiyear feature. 2. The student chooses to "close" his or her MPN so it cannot be used for additional loans and signs a new MPN instead.
What two categories of students are subject to loan proration
1. Students enrolled in undergraduate programs of study shorter than an academic year 2. Students enrolled in the final remaining period of an undergraduate program of study when the program is equal to or longer than an academic year, but the student's final period of enrollment is shorter than an academic year
Graduate students are subject to Direct Loan proration.
False
Interest on all subsidized loans first disbursed on or after July 1, 2012 and before July 1, 2014, will begin to accrue as soon as the student ceases to be enrolled at least half time
True
Lisa received an aid offer from her school's financial aid office. Next to each source of aid, she must check a box either accepting or declining the amount and return the document to the school. This is an example of
Direct Loan affirmative confirmation
What is the purpose of an origination fee?
The purpose of an origination fee is to help offset the cost of making a loan
. A nonstandard term is any term that does not meet the definition of a semester, trimester, or quarter
True
Maggie is enrolled in an undergraduate program of study that consists of 36 weeks of instructional time and she is expected to complete at least 24 semester credit hours if enrolled full time. Has her institution met the minimum definition of an academic year for this program of study?
Yes, the program meets the minimum definition of an academic year, which is a minimum of 30 weeks on instructional time and 24 credits for an undergraduate program.
Subsidized loans, unsubsidized loans, and PLUS Loans first disbursed on or after July 1, 2013, have
a fixed interest rate.
Unlike the SAY, the BBAY always begins with
a period of enrollment the student attends.
Direct Unsubsidized Loans
are non-need-based. Eligibility is not determined based on the EFC.
All borrowers regain eligibility the
fall semester
There are two basic kinds of interest rates
fixed or variable
At that point, the student becomes responsible
for both the interest and the principal balance of the loan.
