Federal Loans and Private Loans
The Federal Direct Loan Program (also called FLDP, FDSLP, and Direct Loan Program) provides low-interest loans for students and parents to help pay for the cost of college. The lender is the U.S. Department of Education rather than a bank or other financial institution.
All Federal Direct Loans require:
- report any scholarship, grant, fellowship, or loan received to the Financial Aid Office.
- report any changes in financial or academic status, academic program, living arrangements, enrollment status or name changes. The failure to do so may result in the cancellation, reduction, and/or repayment of need-based awards.
- meet all Satisfactory Academic Progress requirements before any funds are posted to accounts or released. If minimum requirements are not met, students may appeal the decision. For additional information call 334-386-7195 or email firstname.lastname@example.org.
Federal Direct Loans
Federal Stafford Loans
A subsidized Stafford loan is need-based and is awarded in the student’s name. Financial need is determined by the results of the FAFSA. The federal government pays the interest accruing on the loan while the student is enrolled at least half time in a degree seeking program. The loan is not based on credit-worthiness, nor is a co-signer required.
An unsubsidized Stafford loan is not a need-based loan. The borrower is charged interest from the time the loan is forwarded from the Department of Education to the school until it is paid in full. The student has the option of paying this interest while in school or capitalizing the interest at repayment.
Capitalization is the process by which the Department of Education adds the unpaid interest balance to the total amount of repayment. If you choose to pay the interest as it accumulates, you will repay less in the long run. The interest rate on a Stafford Loan is fixed and may change each July 1st.
Borrowers can receive a combination of subsidized and unsubsidized loans. For example, if a first year dependent student is eligible to borrow only $1000 under the subsidized program, he may borrow an additional $4500 under the unsubsidized program to receive a total Federal Stafford Loan equal to $5500 for the first year of undergraduate study. However, the maximum loan eligibility may not exceed federally regulated limits. Stafford/PLUS loans are disbursed with a minimum enrollment of 6 hours.
Annual Loan Limits
|Unsubsidized Federal Stafford Loan
Amounts are off-set by subsidized Federal
||1st year- $5500
||1st year- $9500
||2nd year- $6500
||2nd year- $10500
||3rd year- $7500
||3rd year- $12,500
||4th year- $7500
||4th year- $12,500
Aggregate Loan Limits
- $31,000 as a dependent undergraduate
- $57,500 as an independent undergraduate (no more than $23,000 of this can be in subsidized loans)
- $138,500 as a graduate student
Borrowers will be charged an origination fee. Guarantee and origination fees may be deducted from the total amount borrowed. The student will receive a disclosure statement from the servicer with the amount of proceeds that have been disbursed and the applicable interest rate. Business Office will credit the amount received to the student's account.
Federal Stafford Loan proceeds are disbursed electronically and credited to your account.
The net amount of the student's Federal Stafford Loan will be credited to his account. If this, along with any other aid applied, results in a balance due to the University, the student must pay the difference. if your loan funds exceed the balance due the University, a check made payable to you will be available within 10 working days of the posting of the award in the Business Office. The refund is usually available within 10 days of the disbursement date.
Loan Entrance/ Exit Counseling
A first time Stafford loan borrower is required to participate in an Entrance Counseling Session prior to receiving the first disbursement of a loan. A student who is graduating or withdrawing from Faulkner is required to participate in an Exit Counseling Session.
Federal Perkins Loans
Faulkner offers Perkins Loans to applicants who demonstrate exceptional financial need. Eligible undergraduates may borrow up to a maximum of $5500 per year, to an aggregate total of $27,500 for undergraduate study. Loans are made directly to students with Faulkner as the lender. Students must meet selection criteria, which is available in the Financial Aid Office.
Interest Rate and Payment Terms
The interest rate for Perkins Loans is a fixed rate of 5%. Interest does not accrue while the borrower remains in school at least half time or during a nine month grace period that follows. Repayment begins nine months after the borrower is last enrolled at least half time, and may extend up to a maximum of 10 years with no prepayment penalty. There are no fees.
Awarded funds are credited to a student's account against monies owed the University within 2 weeks of attending classes.
Loan Exit Counseling
Borrowers are required to receive loan exit counseling when enrolled less than half time or upon graduation. These sessions are conducted by the Business Office.
Federal Parent Loan for Undergraduate Students (PLUS)
Either parent may borrow funds for a dependent undergraduate student to meet all or part of the educational expenses. PLUS loans require completion of a PLUS Loan Information Sheet.
- The borrower must be a U.S. citizen or eligible non-citizen and must have good credit. The student must be enrolled at least half time (6 semester hours) and be in good academic progress status.
- Parents may borrow an amount equal to the cost of attendance minus other financial aid for which the student is eligible. There is no aggregate limit on the total amount that may be borrowed.
- The interest rate for the Federal PLUS Program is fixed.
- Borrowers may be charged a guarantee fee and an origination fee.
- Dependent students, whose parents or guardians have been denied a PLUS loan, may borrow up to the increased independent student unsubsidized maximum.
Federal PLUS funds are typically disbursed in two installments - one in the Fall Semester and one in the Spring Semester. Funds will be received via Electronic Funds Transfer (EFT) and automatically posted to the student's account (assuming the student is enrolled at least half time and is otherwise eligible). Funds may be used to pay monies owed the University first, with any remaining funds issued as a check which is mailed to the parent's home address.
Repayment begins within 60 days after the final disbursement for each specific loan received. There is no grace period. This means that interest begins to accumulate at the time the first disbursement is made. Payments are made while the student is in school. Exceptions to this (deferment or forbearance) are available. For example, a parent attending college at least half time may defer payments and all parents may choose an interest only repayment option for up to 24-48 months. Please keep in mind that choosing one of these options will increase the overall cost of the loan. The parent borrower must contact the servicer for details. Non-payment will result in collection costs, legal fees, and late fees.
The servicer will arrange a repayment schedule, and a maximum repayment period of ten (10) years. The promissory note contains detailed terms and conditions of your loan.
Sample PLUS Monthly Repayments
(At maximum interest rate of 9% and for 10-year repayment term)
*estimated monthly payment