Description of Loan Programs

Types of Loan Programs

Federal Perkins Loan
Federal Subsidized Stafford Loan
Federal Unsubsidized Stafford Loan
Parent Loans for Undergraduate Students (PLUS)
Private/Alternative Loan

Federal Perkins Loan

Eligibility Requirements: To be considered for a limited amount of UM Perkins Loan funds, you must do the following:

meet the Eligibility Requirements for Federal Student Aid
submit a FAFSA by UM's Priority Deadline
demonstrate high financial need
enroll as a degree-seeking student

If you are awarded a Perkins Loan, it will be listed on your Award Notification.

Enrollment Requirements: To receive the full award for a semester, you must enroll for at least 9 credits during that semester. If you enroll for 6 to 8 credits during a semester, you will receive 50% of your original semester award.

Processing Fees: Perkins Loans do not have any processing fees.

Interest Rate: Perkins Loans are interest free while you are enrolled in school at least half-time in a degree granting program (undergraduate or graduate). The interest rate during repayment is fixed at 5%.

Repayment Terms: Perkins loan repayment begins 9 months after you cease to be enrolled at least half-time. The maximum repayment period is 10 years.

Borrowing Limits: If you are offered a Perkins Loan, the amount borrowed cannot exceed the amount listed on your Award Notification.

For information on how to apply for and accept Perkins Loans, see Perkins Loan Application Process.

Federal Subsidized Stafford Loans

Eligibility Requirements:

meet the Eligibility Requirements for Federal Student Aid
demonstrate financial need
enroll as a degree-seeking student

Enrollment Requirements: You must enroll for at least 6 credits or 24 Graduate Units for each semester that you want to receive the loan.

Processing Fees: The lender is authorized to change the borrower origination and guarantee fees. These fees will not exceed 4% of the amount borrowed and they will be deducted from each semester's disbursement.

Interest Rate: Subsidized Stafford Loans are interest free while you are enrolled in school at least half-time in a degree granting program (undergraduate or graduate). The current interest rate is fixed at 6.0% for undergraduate students, and at 6.8% for graduate students.

Repayment Terms: Stafford Loan repayment begins 6 months after you cease to be enrolled at least half-time. The Maximum Repayment Period is 10 years.

Borrowing Limits: See Stafford Loan Borrowing Limits.

For information on how to apply for and accept Stafford Loans, see Stafford Loan Application Process.

Federal Unsubsidized Stafford Loans

Eligibility Requirements:

meet the Eligibility Requirements for Federal Student Aid
submit a FAFSA
enroll as degree-seeking student

Students do not need to demonstrate financial need.

Enrollment Requirements: You must enroll for at least 6 credits or 24 Graduate Units for each semester that you want to receive the loan.

Interest Rate: Interest accrues while the student is enrolled in school and during the repayment period. The interest rate will be fixed at 6.8% as of July 1, 2006.

Repayment Terms: Loan repayment begins 6 months after you cease to be enrolled at least half-time. The Maximum Repayment Period is 10 years.

Borrowing Limits: See Stafford Loan Borrowing Limits.

For information on how to apply for Stafford Loans, see Stafford Loan Application Process.

Parent Loans for Undergraduate Students (PLUS)

The Federal PLUS loan can be borrowed by parents of dependent undergraduate students to help pay for the student's education. PLUS loans are processed for one academic year at a time. PLUS loan applications must be processed through a private lender who will approve or deny the application based on a review of the parent borrower's credit history. PLUS loans are typically cheaper than private student loans because PLUS loan borrowing terms are regulated by the U.S. Department of Education.

What if the PLUS loan application is denied?
If a PLUS loan application is denied, the student usually becomes eligible to borrow up to $4,000 (freshmen and sophomores) or $5,000 (juniors and seniors) in additional Unsubsidized Stafford Loan. This additional Stafford loan cannot exceed the student's Projected Cost of Attendance minus all other aid (including other loans). Unsubsidized Stafford Loans are not interest free while the student is in school. If your PLUS loan application has been denied and you would like to borrow the additional Unsubsidized Stafford Loan, please contact OSFA at 301-314-9000 or Contact Us.

Eligibility Requirements:

The student must enroll for at least 6 credits for each semester in which the PLUS loan will be received.
PLUS loans are only available to parents, step-parents, and legal guardians of dependent students. If the student can answer yes to any of the federal dependency questions on the PLUS Loan Request form, then the student is considered automatically independent and his or her parent(s) are ineligible to borrow PLUS Loans.
Non-exempt students must have registered with the Selective Service Administration. Students are exempt if they are female, under 18, born before 1960, on active duty in the U.S. Armed Forces, citizens of the Federated State of Micronesia or the Marshall Islands, or permanent residents of the Trust Territory of the Pacific Islands (Palau).
The student and parent must not owe a refund on any federal grants, must not have borrowed federal student loans in excess of annual or aggregate loan limits, and must not be in default on any federal student loans unless satisfactory payment arrangements have been made.
The student and parent must be U.S. Citizens, U.S. Permanent Residents, or Other Eligible Non-citizens as defined by the U.S. Department of Education.

Enrollment Requirements: The student must enroll for at least 6 credits for each semester that he/she wants to receive the loan.

Interest Rate: The interest rate for the Federal PLUS is fixed at 8.25%. Interest begins accruing when the loan is disbursed.

Repayment Terms: Repayment begins 60 days after the funds are fully disbursed, and the repayment term is up to 10 years. Graduate students may defer repayment while they are in school. There is no six-month grace period as there is with the Stafford Loan program. However, lenders now offer the option for parents to defer payments on the Parent PLUS loan while the undergraduate student on whose behalf they borrowed the PLUS loan is in-school and for a six-month grace period after the student graduates or drops below full-time enrollment. (Payments can also be deferred if the parents are themselves enrolled in college. They will need to submit an application for an in-school deferment). Note that since the interest on the PLUS loan is not subsidized, it continues to accrue while deferred and is capitalized when the loan enters repayment.

Borrowing Limits: Parents may borrow up to the student's yearly Projected Cost of Education minus all other aid the student is receiving (including other student loans). There is no cumulative borrowing limit.

For information on how to apply for the PLUS loan, see PLUS Loan Application Process.

Private/Alternative Loans

In addition to the Federal Perkins, Stafford, and PLUS loan programs, several private lenders offer private student and/or parent loans. These loans are usually more expensive than the federal loans and the costs vary widely between programs. All of these lenders will review the borrower's credit history and some of them will require a loan cosigner. Students/Parents may borrow up to the Student's yearly Projected Cost of Education minus any other aid the student is receiving (including other student/parent's loans).

For more information about these loans and instructions on how to apply for them, see Private Loan Application Process.

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			Last modified: Thursday, 28-Aug-2008 13:08:10 EDT