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Loans are money that must be repaid after graduation or leaving school. Usually, student loans have lower interest rates than commercial loans.
Over half of all student aid funds are in the form of loans. The important thing is not to borrow more than you really need. Remember that loans eventually have to be repaid, with interest. Also keep in mind that you may need to borrow for each year of your education.
Still, don’t be afraid to borrow. Your education should increase your earning power and make it easier for you to repay your loans.
Direct Loans are low-interest loans available to degree-seeking students enrolled at least half-time. The lender is the U.S. Department of Education. Federal Stafford Loans may be subsidized or unsubsidized, depending upon your eligibility for need-based aid. Students must accept the loans on their eFAAN (electronic Financial Aid Award Notification) and will then be directed to complete both Entrance Counseling and the MPN (Master Promissory Note) for federal student loans online at www.studentloans.gov. Student will use their four-digit FAFSA PIN number to electronically complete both Entrance Counseling and the MPN.
You can borrow the maximum annual loan limit from the Ford Federal Direct Loan for the academic year. If you borrow the maximum annual loan limit during Fall and Spring Semesters, you will not be eligible for additional Ford Federal Direct Loan funds for the summer. For more information on the maximum annual amount and interest rates for Direct Loans, please view the Loan Comparison Chart.
The Office of Financial Aid & Scholarships will determine your loan eligibility, approve the loan, receive the funds from the federal government, and credit the loan proceeds directly to your student account. If you drop below half-time status during a term, future disbursements will be cancelled.
Subsidized loans require demonstration of financial need as determined by the information on the FAFSA. You do not pay interest on the loan if you continue to be enrolled at least half-time. Once you graduate or withdraw, payments and interest begin after a six-month grace period. The Subsidized Loan program is a need-based program administered by the University and the federal government. You must be admitted to, and enrolled at least half-time, in a degree program to be eligible.
Unsubsidized loans are not based on need, although you must file the FAFSA to be considered. Interest will be charged from the time the loan is disbursed to you until it is paid in full. You can choose to pay the interest while you are in school or allow it to accumulate. However, allowing it to accumulate will increase the total amount you have to repay. Interest is capitalized once at repayment.
This need-based loan program lets students borrow money at a low rate of interest through their institution from the federal government. Federal Perkins Loans are awarded to students with exceptional financial need directly by the Office of Financial Aid & Scholarships. You are strongly encouraged to submit your Free Application for Federal Student Aid (FAFSA) by the priority deadlines (new students, March 1 or for returning students, April 1) before funds are depleted for the aid year. You must be admitted to, and enrolled at least one-half time, in a degree program to be eligible for a Perkins Loan.
Undergraduate students may be offered up to $3,000 for each year of undergraduate study per federal guidelines.
The Perkins Repayment Chart (shows typical monthly payments and total interest charges for three different 5 percent loans over a 10-year period.
TYPICAL PERKINS LOAN REPAYMENT PLANS
|Total Loan Amount||Number of Payments||Monthly Payment||Total Interest Charges||Total Repaid|
|$ 4,500||120||$ 47.73||$1,227.60||$ 5,727.60|
|$ 9,000||120||$ 95.46||$2,455.20||$11,910.40|
|$ 18,000||120||$ 190.92||$4,910.40||$22,910.40|
When you accept a Perkins loan award, you will be sent an email directing you to a website to complete the Perkins promissory note and loan disclosure. Your loan cannot be disbursed to you until you have signed the promissory note, a legal and binding contract of your promise to repay the Perkins loan, according to the loan amount, interest, repayment terms, and exit counseling requirement. Your Perkins loan is serviced by ECSI, Inc.
Parents of a dependent student may apply for a Ford Federal Direct PLUS loan, a non-need-based program administered by the University and the federal government. The funds will first be applied to the student’s financial account to pay for tuition and fees, room and board, and other school charges. If any money remains, parents will receive the balance. The student must be admitted to and enrolled at least half time in a degree program.
Parents of dependent students may apply for loans from a non-need-based program, the Ford Federal Direct Parent PLUS Loan Program. The parent may borrow an amount up to the cost of attendance minus other financial aid. At disbursement, the funds will first be transferred into the student's University account to pay for on-campus charges, e.g., tuition and fees, room and board, and other school charges. If any money remains, the parent (borrower) will receive the balance, unless the parent designates that the student should be the recipient.
Students and Parents may begin the PLUS Loan Process by accepting the PLUS Loan on the eFAAN (electronic Financial Aid Award Notification) and completing a PLUS Active Confirmation Form and submitting it to the Office of Financial Aid & Scholarships. In addition the PLUS Active Confirmation Form, parents must also complete a PLUS MPN (Master Promissory Note) online. This PLUS MPN is completed electronically and signed for by using the parent four-digit FAFSA PIN number. Please visit www.studentloans.gov to log-in and start the PLUS MPN Process. The Office of Financial Aid & Scholarships will be electronically notified within 7-10 days that the PLUS MPN was completed.
Estimated Monthly Payments
The amount of each payment depends on the size of your debt and on the length of your repayment period. Usually, you’ll pay at least $50 a month. The sample repayment plan shows estimated monthly payments and total interest charges for loans of varying amounts and interest rates, with typical repayment periods.
A private alternative loan is a non-federal education loan, through a private lending institution. These loans can provide additional funding when other financial aid does not fully cover costs or when a student is not eligible for financial aid (ie., international students, students currently on financial aid suspension, etc.). Students entering the aviation program at UMC may look to alternative loans to help bridge the gap between traditional funding sources and the costs associated with the program.
Most alternative loan applications will require certification by the Office of Financial Aid & Scholarships. Terms, fees, and borrowing limits of alternative loans differ. The yearly amount cannot exceed the annual cost of attendance minus other financial aid. Borrowing an alternative loan is a decision that should be made with careful consideration.
Alternative loans terms such as interest rate, origination fees, borrowing limits and length of repayment are based on student/cosigner creditworthiness. In order to receive the best possible loan terms, it is to your advantage to have a cosigner. Ask questions when considering an alternative loan. These questions should include, but are not limited to:
Source: Project on Student Debt of the Institute for College Access and Success
The University of Minnesota, Crookston has developed a Private Alternative Lender list by evaluating private loan lenders on the following criteria:
• quality of customer service to students and the University
• speed of problem resolution
• online certification for school and electronic funds transfer (EFT)
• provides products that meet the varied needs of University of Minnesota students
• have made loans to UMC students in the past
You may borrow from any lender you choose. The University of Minnesota, Crookston offers a student private alternative loan lender selection tool below.
The Office of Financial Aid & Scholarships will process all loans, regardless of whether the lenders appear in the list.
When requested, provide your lender with these identifiers:
Always remember that your private loan is borrowed from a private loan company, not the University of Minnesota, Crookston. Sign the promissory note and/or truth-in-lending disclosure forms only when you understand and agree with the rates and terms given in those documents. Keep copies of all your paperwork for as long as you have the loan. You must handle any concerns or problems you encounter with your private loan lender independently.
Do you have one or more of these special situations?
• less than half-time enrollment
• paying a previous term balance
If any of the above applies, you should discuss your special situation with your private lender before completing the application to make sure that they will lend to you. Some private lenders will not lend to students who have one or more of the special situations mentioned above.
Financial Aid & Scholarship Office
170 Owen Hall
2900 University Ave
Crookston, MN 56716