Loan Information (old with errors)

Educational loans are an investment in one’s self for the future. Did you know that a college graduate is projected to earn a minimum of a million dollars above what a person without an education will earn? Potential earnings are certainly an incentive, but even more powerful is the ability to be able to CHOOSE what career path you will utilize to earn a living for yourself. Becoming an educated person puts you in the position of making the choice.

Using a loan is an acceptable form of payment, but we want to give you some practical information.

Borrow only what you need. How much is too much loan? The following website has a debt calculator, and also a calculator designed to project how much of a payment you would be responsible based on the amount of loan you are considering taking.

• Debt Calculator

Stafford Loans - any student who files a FAFSA, and who meets the eligibility requirements will qualify for a federal Stafford loan. The interest rate is set July 1st of each year, and is a fixed rate loan. For 2008-2009 the subsidized rate is 6.0%, the unsubsidized rate is 6.8%. Subsidized Stafford loan - does not accrue interest until the time that the student goes into repayment.

• Unsubsidized Stafford loan - begins to accrue interest at the time of disbursement.

Parent PLUS Loan - Parent Loan for Undergraduate Study. This is a federally backed, credit based loan program designed to allow the parent of an undergraduate student borrow funds to assist with the student’s educational expense. The loan may be deferred until the time that the student leaves college. There is no penalty for early repayment. The interest rate is currently 8.5% and has an origination fee.

If a borrower is denied a Plus loan, the student then becomes eligible for additional Unsubsidized Stafford loan.

Alternative Loan - Most lenders sponsor a private, alternative loan.  They are credit based loans. The interest rate is usually based on the US T bill or LIBOR, plus the assessment of the applicant’s credit rating.  The interest rate will range from a nominal 5% up to in excess of 20%.

These loans are usually sought when the Stafford loan does not cover the balance and when taking the PLUS loan is not possible.  These are loans of the last resort.

The Federal Family Education Loan Program (FFELP) is the largest single source of federal aid for students pursuing higher education. This program has two main sources of funding: Federal Stafford loans for students and Federal PLUS loan for parents.

FEDERAL STAFFORD LOANS
There are two types of Federal Stafford Loans: subsidized and unsubsidized. Descriptions of these two programs and loan limit information is provided below:

FEDERAL PLUS LOANS
If you're an undergraduate student and dependent on your parents, your parents may qualify for a Federal PLUS loan. You must be enrolled in an eligible school, and you and your parent who will be borrowing the money must be U.S. citizens.

The PLUS loan is available without regard to financial need, however, the lender is required to determine whether the parent borrower has a good credit history. Your parents are responsible for repaying the loan; repayment begins 60 days after the loan is fully disbursed.

To be eligible for a PLUS loan, your parents must be your natural or adoptive parents, or stepparents.

Now parents of dependent students may apply for PLUS loans faster than ever. This process cuts days, and in many cases, weeks out of the credit approval process. When you apply online, a credit check will be processed within 24 hours under normal circumstances. As long as your credit is approved, parents may simply complete a promissory note according to the instructions, print, sign and return it to the appropriate lender.

RIGHTS AND RESPONSIBILITIES
It is important that you understand your rights and responsibilities before borrowing a loan. By doing so, you will greatly diminish delays or problems you may otherwise encounter. Your rights and responsibilities include the following:

• You must pay back your loan(s) with accrued interest and any deducted fees.
• You are required to repay education loans even if you don't complete your education, if you are dissatisfied with your education, or if you are unable to get a job after you complete your education.
• You must repay your loan(s) within 10 years, unless your loans are consolidated.
• You may prepay all or part of your loan(s) without penalty.
• Your minimum monthly payment for a loan is $50, but may be more depending on the amount borrowed.
• Your repayment will begin as follows:
  • Subsidized Stafford Loan - following a six-month grace period. Unsubsidized Stafford Loan - following a six-month grace period, even though interest accrues while you're in school and can be paid or postponed until graduation.
  • PLUS Loan - within 60 days of the last disbursement, unless a deferment has been approved.
• You are responsible for notifying your school and lender if you have received student loans from more than one lender.
• You must use money received from student loans for education-related expenses only. You can't use loan funds to buy a car.
• You will be notified, in writing, if any of your loans are transferred to a servicer or secondary market. You will direct all future correspondence to that organization.
• You must notify your lender in writing of:
  • Name or address change
  • Failure to enroll at least half-time.
  • Failure to enroll for the loan period certified.
  • Withdrawal from school or redution of attendance to less than half-time.
  • Graduation
• If you do not qualify for a deferment and are unable to make payments on a loan, you may request forbearance from the holder of your loan(s). Forbearance is a special benefit for borrowers experiencing financial hardship.
• You cannot have your student loan(s) discharged through bankruptcy.
• If you meet the eligibility requirements, you have a right to repayment deferments which suspend principal and interest payments for a specified period of time. Deferments can be requested for a number of reasons, including returning to school on at least a half time basis.
• You have a right to consider the loan repayment alternative for which you qualify as you enter the repayment process. This includes loan consolidation alternatives.
• If you fail to repay your loan(s), you may be considered in default and the following may result:
  • Your status may be reported to a national credit bureau resulting in a negative effect on your credit rating for seven years after the loan(s) are paid in full.
  • The entire unpaid amount of your loan(s), including interest, may become due and payable immediately.
  • Your federal and state income tax refunds may be withheld from you.
  • Your wages may be garnished
  • You may be ineligible to receive any future federal or state financial aid funds.
  • In addition to the amount borrowed, you will be responsible for the collection costs incurred if your loan should default.

REPAYING YOUR LOAN
You are required to begin repaying your Federal Stafford loan six months after you graduate, leave school or drop below half-time attendance. Your parents are required to begin repaying PLUS loans 60 days after the loans are fully disbursed. In both cases, borrowers generally have 10 years to repay these loans. Under a level repayment plan your monthly payment would be at least $50. There are other repayment options:

• Many lenders offer flexible repayment options that allow you to gradually increase your payments over time or tie the size of your monthly payment to your income. You can learn more about these options by asking your lender or using some of the repayment calculators available to you at http://www.usagroup.com.
• You can investigate consolidating all of your education loans so you have one monthly payment. This program also generally allows you to extend the repayment period beyond 10 years.
• If you experience economic hardship or other circumstances that limit your ability to repay your loan, you might qualify for a deferment or forbearance: Deferment allows you to postpone repayments for certain approved reasons for as long as you are enrolled at least half-time in a postsecondary school, graduate fellowship or rehabilitation program (if you have disabilities). Deferments of up to three years are also available if you are unemployed. If you don't qualify for a government approved deferment, you can request forbearance from your lender. Forbearance can delay or reduce your monthly payments. Usually, however, you must still pay the interest on your loan during the forbearance period.

ENTRANCE/EXIT LOAN COUNSELING
Entrance counseling must be completed before a student can receive a disbursement of Perkins or Stafford loan funds. Georgia Military College students may fulfill this federal requirement by clicking on www.studentloans.gov

Entrance counseling is designed to ensure that a potential borrower is educated and informed of loan processes, eligibility, and responsibility.

Exit counseling must be completed when a student who has received Stafford loans and either graduates or leaves Georgia Military College permanently.  Georgia Military College students may fulfill this federal requirement by clicking on www.studentloans.gov

Our goal is to make sure you are ready to meet your repayment obligations successfully and to counsel you on your options