Educational loans provide an excellent source of financial assistance. Once all sources of gift aid have been explored, you and your financial aid administrator can consider a number of education loans available through the Federal Family Education Loan program. Unlike scholarships, grants or work study programs, loans must be repaid, including their interest. Federal loans include the Perkins Loan, and both the subsidized and unsubsidized Stafford Loan programs.
Federal Perkins Loan
The Perkins Loan is a federal loan administered by the College. It is in the student’s name and it must be repaid. Eligibility is determined by the results of the FAFSA. This loan is a needs-based loan and has a fixed interest rate of 5%. Interest does not accrue and repayment does not begin until nine months after you have graduated, dropped below half-time status, or withdrawn from the college. The funds range from $500 - $5000 per year based on your Cost of Attendance and availability of funds. If you are enrolled less than half-time, your award may be reduced or cancelled. If you are awarded and you accept a Perkins Loan you must complete an electronic master promissory note (e-MPN), which you will find on the Student Loan Service Center web site at http://slsc.albany.edu.
Federal Direct Stafford Loan
Federal Direct Stafford loans are loans that are in the student’s name and can be either subsidized or unsubsidized.
A subsidized Stafford loan is awarded on the basis of financial need which is determined from the FAFSA. The interest rate is fixed at 4.66%. The federal government pays the interest accruing on the loan while the student is enrolled at least half-time in a degree seeking program of study. Repayment does not begin until six months after you have graduated, dropped below half-time status, or withdrawn from the college. The loan is not credit based, nor does it require a co-signer.
An unsubsidized loan is not need based. The interest is fixed at 4.66%. The government does not pay the interest while the student is in school. The borrower is charged interest from the time the loan is disbursed until it is paid in full. The student can choose to pay the interest while in school or defer the interest and have it added to the principal balance. As with the subsidized loan, repayment on the principal does not begin until six months after you have graduated, dropped below half-time status, or withdrawn from the college.
For subsidized and unsubsidized loans whose first disbursement is on or after December 1, 2013, the lender withholds 1.072% from the borrowed amount for loan origination fees, prior to disbursement. For subsidized and unsubsidized loans whose first disbursement is on or after October 1, 2014, the lender withholds 1.073% from the borrowed amount for loan origination fees.
Stafford loans have maximum annual limits. The following is a list of the maximum amounts that may be borrowed.
Federal Direct Stafford Loan Borrower Instructions
Federal Parent Loan for Undergraduate Students (PLUS)
This is a loan that is available to parents of a dependent student. The loan is in the parent’s name and the repayment is the parent’s responsibility. The interest rate is fixed at 7.21%. Parents may borrow up to the cost attendance of their dependent’s education, less any amount of financial aid received. Eligibility is based on credit history. The loans disburse in two disbursements if for one semester. The loan amount is not to exceed the student’s federal budget. For loans whose first disbursement is after December 1, 2013, the lender withholds 4.288% from the borrowed amount for loan origination fees, prior to disbursement. For loans whose first disbursement is on or after October 1, 2014, the lender withholds 4.292% from the borrowed amount for loan origination fees. Repayment begins 60 days after the loan is fully disbursed. The payments are spread out over a 10 year period. The payments can be deferred while the student is enrolled in school. Please contact the office of financial aid or the lender of the loan to find out the details.
There are two forms that have to be completed for the disbursement of these loan funds. An application and the PLUS Master promissory note must be completed. To complete these forms on line please go to http://www.studentloans.gov
Alternative (Private) Loans
The Alternative loan is a private loan with the student as the borrower. They are used to fill the gap between the cost of attendance and financial aid received. These loans are non-federal programs and are not federally insured or guaranteed. It is recommended that students borrow the maximum Federal Direct Stafford Loans for which they are eligible before applying for a private loan. Alternative loans are issued in the student’s name. Private loan lenders usually defer the principal payment while the student is in school and for up to six months after the student has graduated, dropped below half-time status, or withdrawn from the College. Alternative loans are based on a student’s credit history and can have a higher interest rate. A lack of established credit history may require the use of a co-signer. The interest rate is variable and the fees could be as low as 0%, which are based on the credit of the co-signer. An Alternative Loan Application will need to be completed. The student must contact the lender directly.
Parents and Students should pursue all the financial aid including grants, scholarships, work study, Federal Stafford loans, Federal Perkins loans, and Federal Parent (PLUS) before pursuing a private/alternative loan as the terms of the private/alternative loan are generally not as favorable as compared to the Federal loan programs.