Federal Loans and Private Loans
The Federal Direct Loan Program provides low-interest loans for students 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.
Federal Direct Loans require:
- completion of the FAFSA
- a Master Promissory Note (MPN)
- Loan Entrance Counseling
- Loan Information Sheet
Students must:
- report any scholarship, grant, fellowship, or loan received to the Financial Aid Office.
- The failure to do so may result in the cancellation, reduction, and/or repayment of need-based awards.
- meet all Satisfactory Academic Progress requirements to maintain eligibility for Title IV funding.
Federal Direct Loans
Unsubsidized Direct Loans
Perkins
Grad Plus
Unsubsidized Direct Loans
With an unsubsidized 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.
Capitalization is the process by which the Department of Education adds the unpaid interest balance to your principal balance. 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.
However, the maximum loan eligibility may not exceed federally regulated limits.
Loan Limits
Annual Loan Limits for Unsubsidized Stafford Loans
$20,500 per award year
Aggregate Loan Limits
$138,500 as a graduate/professional student
Grad Plus Loan Limits
There are no limits to Grad Plus Loans
Fees
Borrowers will be charged a loan origination fee by the Department of Education. Loan fees will 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. Student Accounts Office will credit the amount received to the student’s account.
Loan disbursements
Federal Direct Loan proceeds are disbursed electronically and credited to your Faulkner account. You will recieve 2 disbursements per semester.
The net amount of the student’s Federal Direct Loan will be credited to your Faulkner 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 or direct deposit made payable to you will be available within 10 working days of the posting of the award in the Student Accounts Office.
Loan Entrance/ Exit Counseling
A first time Direct loan borrower is required to complete 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 complete an Exit Counseling Session.
Federal Perkins Loans
Graduates may borrow up to $8,000 per year and an aggregate of $60,000. 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.
Loan Disbursement
Awarded funds are credited to a student’s Faulkner account against monies owed the University.
Loan Exit Counseling for Perkins Loans
Borrowers are required to receive loan exit counseling when enrolled less than half time or upon graduation. These sessions are conducted by the Student Accounts Office.
Grad Plus Loans
Graduate students are eligible to borrow extra loan money thru a Grad Plus loan if the cost of attendance will allow it. They are credit checked loans.
The borrower must be a U.S. citizen or eligible non-citizen and must have good credit or a credit worthy co-signer. The student must be enrolled at least half time and be in good academic progress status.
Loan Disbursement
Federal PLUS funds are disbursed in two installments per 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 will be used to pay monies owed the University first, with any remaining funds issued to the student.
Repayment Terms
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.
The servicer will arrange a repayment schedule, the promissory note contains detailed terms and conditions of your loan.
Sample Monthly Repayments
Sample Direct Loan Monthly Repayments
(At interest rate of 6.80%)
| Amount Borrowed | *Monthly Payment |
| $10,000 | $115.08 |
| $15,000 | $172.62 |
| $20,000 | $230.16 |
| $30,000 | $345.24 |
Sample PLUS Monthly Repayments
(At maximum interest rate of 9% and for 10-year repayment term)
| Amount Borrowed | *Monthly Payment |
| $10,000 | $126.68 |
| $15,000 | $190.05 |
| $20,000 | $253.40 |
| $30,000 | $380.10 |
*estimated monthly payment