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University of Illinois Springfield

Financial Assistance University of Illinois Springfield

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Apply for a Federal Direct Loan

Welcome to the UIS Office of Financial Assistance Electronic Federal Direct Loan Application Process (Effective Fall 2009)

Effective Fall 2009, UIS will begin participation in the Federal Direct Loan Program. UIS recently researched and compared the two federal student loan programs, the Federal Family Educational Loan Program (FFELP) and the Federal Direct Student Loan program. UIS currently participates in the FFELP program for the Stafford and PLUS loans, but we wanted to be sure that the best possible program is in place. During our research it became evident that the Federal Direct Loan program was the better loan program for our students and parents for a number of reasons. The primary reason for our decision to change programs is assurance of funding. Over the last year, there have been unforeseen funding delays as a result of the volatile conditions in the credit market, as well as in the student lending industry.

How does this change affect me?

New and returning student borrowers will be required to eSign a Federal Direct Loan Master Promissory Note.

All new and returning borrowers will be required to complete Federal Direct Loan Entrance Counseling.

Direct lending offers numerous borrower benefits including:

Effective July 1, 2009, the government pays 1.00% of your origination fee at disbursement, commonly called the loan rebate benefit. You are eligible to keep this benefit as long as you make the first 12 monthly payments of your student loan on time. The net disbursement of your loan will be 99.5% of the principal.

There is a .25% interest rate reduction for automatically debiting your payment from your checking account when you begin repayment.

Repayment options include Standard, Extended, Graduated, and Income Contingent.

How does this affect my parent’s Parent PLUS Loan?

Parents who wish to borrow a Federal Direct Parent PLUS Loan will need to complete
the Federal Direct Parent PLUS Loan Form and return it to our office by the deadline dates listed on the form.

Frequently Asked Questions

What will happen to the existing loans that I have borrowed from other lenders?
After graduation, you have a choice. You may either make individual payments to your previous lender(s) and to the Department of Education for your Direct Loans, or you can consolidate your loans into one simple payment. You may either consolidate all your loans with your previous lender, or with the Department of Education. However, many private lenders have discontinued their consolidation services.

If I have previously borrowed under the FFELP Program, do I have to complete another Master Promissory Note (MPN)?
Yes, you must sign a new Federal Direct Loan Master Promissory Note. This will be the last promissory note you will have to sign as long as you continue to attend UIS. Your Federal PIN is required in order to eSign.

How and when do I complete a Direct Loan Master Promissory Note (MPN)?
You should complete a Federal Direct Loan Master Promissory Note as soon as possible if you plan to borrow a Subsidized or Unsubsidized Loan for 2009-10.

I have previously completed Entrance Counseling under the FFELP Program, do I have to complete Fderal Direct Loan Entrance Counseling?
Yes, you will be required to complete Federal Direct Loan Entrance Counseling even if you have already completed Entrance Counseling under the FFELP program. New borrowers will be required to complete Direct Loan Entrance Counseling.

Where can I go to consolidate my loans?
You may explore your options, as discussed above, with either private lenders or with the Federal Direct Loan Consolidation Program.

Will the change in loan programs cause my prior loans go into repayment?
No, your prior Stafford loans will not go into repayment as long as you remain enrolled at least half time.

Federal Direct Subsidized Stafford Loan

A Federal Direct Subsidized Loan is awarded to meet financial need after other resources are subtracted or to the annual maximum loan limit, whichever is lower. It is the U.S. Department of Education’s major form of self-help aid and is available through the William D. Ford Federal Direct Loan Program. The interest rate for Federal Direct Subsidized loans disbursed on or after July 1, 2006 until June 30, 2008 is fixed at 6.8%. For undergraduate students, Federal Direct Subsidized Loans offered from July 1, 2008 until June 30, 2009 have a fixed interest rate of 6.0% and from July 1, 2009 until June 30, 2010 have a fixed interest rate of 5.6%. For graduate/professional students, Federal Direct Subsidized loans have a fixed interest rate of 6.8%. The federal government pays interest on the loan until you begin repayment.

Apply for a Federal Direct Subsidized Loan

To apply for a Federal Direct Subsidized Loan, you must complete the FAFSA. To be eligible, you must be enrolled for at least six hours per semester. If you are eligible for a Federal Direct Subsidized Loan, it will be included on your Financial Aid Award Letter.

Accept/Reduce/Decline a Federal Direct Subsidized Loan

You can accept or decline a Federal Direct Subsidized Loan on your electronic Award Letter by selecting “Accept” or “Decline” in the dropdown box on the Award Letter Accept/Decline Awards page. You can reduce your loan by selecting “Accept” in the dropdown box and entering a lower award amount in the “Partial Accept” field. If you wish to request loan changes, you should use the “Request Changes” on the Award Letter Information Request page of your electronic Award Letter.

A Master Promissory Note (MPN) and Entrance Counseling are required for Federal Direct Loans before the loan funds will be disbursed. In most cases, you will only be required to complete one MPN and complete one entrance counseling session during your college career.

Federal Direct Unsubsidized Stafford Loans

A Federal Direct Unsubsidized Loan is not based on your financial need. It is available to you through the William D. Ford Federal Direct Loan Program, if your Estimated Cost of Attendance (COA) is greater than your financial aid and you have not reached your annual maximum loan limit through the Federal Direct Subsidized Loan. The interest rate for Federal Direct Unsubsidized loans disbursed on or after July 1, 2006 is fixed at 6.8%. You are charged interest on this loan from the time the loan is disbursed until it is paid in full. If the interest is allowed to accumulate, the interest will be added to the principal amount of the loan and increase the amount to be repaid.

Apply for a Federal Direct Unsubsidized Loan

To apply for a Federal Direct Unsubsidized Loan, you must complete the FAFSA. To be eligible, you must be enrolled for at least six hours per semester. If you are eligible for a Federal Direct Unsubsidized Loan, it will be included on your Financial Aid Award Letter.

Accept/Reduce/Decline a Federal Direct Unsubsidized Loan

You can accept or decline a Federal Direct Unsubsidized Loan on your electronic Award Letter by selecting “Accept” or “Decline” in the dropdown box on the Award Letter Accept/Decline Awards page. You can reduce your loan by selecting “Accept” in the dropdown box and entering a lower award amount in the “Partial Accept” field. If you wish to request loan changes, you should use the “Request Changes” on the Award Letter Information Request page of your electronic Award Letter.

A Master Promissory Note (MPN) and Entrance Counseling are required for Federal Direct Loans before the loan funds will be disbursed. In most cases, you will only be required to complete one MPN and complete one entrance counseling session during your college career.

Federal Direct Parent PLUS Loans

Parent Loans for Undergraduate Students (Federal Direct Parent PLUS) are federal loans that parents with good credit histories may borrow to help pay the educational expenses of an undergraduate student enrolled in at least 6 credit hours per semester.

A parent may borrow up to the total of the Estimated Cost of Attendance less resources and all other financial aid received by the student. The interest rate is a fixed interest rate of 7.9% and is charged on the loan from the time the loan funds are disbursed until it is paid in full.

Apply – Complete a Federal Direct Parent PLUS Loan Request Form

If a Federal Direct Parent PLUS loan is the only financial aid you desire, then filing a FAFSA is not required. Complete the Federal Direct Parent PLUS Loan form and return it to OFA by the deadline dates listed on the form.

Parent Eligibility

Parents must submit to a credit check by the United States Department of Education to be eligible for a Federal Direct Parent PLUS Loan. You authorize the credit check when you sign the Federal Direct Parent PLUS Loan Request Form.

Federal Direct Parent PLUS Loan Processing / Receipt of Funds

The Direct Loan Processor will notify the parent borrower and the Office of Student Financial Aid of the result of the credit check. The borrower cannot be 90 days or more delinquent on the repayment of any debt or the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment or write-off of a Title IV debt during the last five years. If credit is approved, loan funds will be disbursed. The funds will be applied to tuition, fees, and other university charges.

Refunds

If the Federal Direct Parent PLUS disbursement generates a refund after University charges are paid, the refunded amount will go to the parent unless the parent borrower checks the appropriate box on the PLUS Request Form authorizing that the refund be sent to the student.

Federal Direct Grad PLUS Loans

Grad PLUS Loans are federal loans that graduate and professional students with good credit history may borrow to help pay educational expenses if you are enrolled in at least 6 credit hours per semester.

A student may borrow up to the total of the Estimated Cost of Attendance less resources and other financial aid. The interest rate is a fixed interest rate of 7.9% and is charged on the loan from the time the loan funds are disbursed until it is paid in full.

Apply for a Grad PLUS Loan

To apply for a Grad PLUS loan you must complete the FAFSA. Additionally you will be required to sign a Grad PLUS Master Promissory Note (MPN) and complete Entrance Counseling. The Entrance Counseling requirement for a Grad PLUS Loan is different from that of a Direct Stafford Loan (subsidized/unsubsidized) but may be completed at the same time by completing the Combination – Stafford and PLUS loan option. In addition, to be eligible for a Grad PLUS Loan, you must be enrolled at least six hours per semester.

Eligibility

To be eligible for a Grad PLUS Loan, you must submit to a credit check by the U.S. Department of Education. You authorize the credit check when you agree to the Award Letter Financial Aid Terms and Conditions.

Grad PLUS Loan Processing / Receipt of Funds

The Direct Loan Processor will notify you and OSFA of the result of the credit check. You cannot be 90 days or more delinquent on the repayment of any debt or the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Title IV debt during the last five years. If credit is approved, loan funds will be disbursed. The funds will be applied to tuition, fees, and other university charges.

Refunds

If a Grad PLUS disbursement generates a refund, the refunded amount will be deposited into your bank account. Authorizing direct deposit of refunds gives you the quickest access to your funds.

How do I contact the Direct Loan Program?

Direct Loan Program: 1-800-848-0979

PIN Website: A Federal PIN is required in order to eSign your Direct Loan MPN.

Master Promissory Note: A Federal Direct Loan MPN is required of all new and current borrowers effective summer 2009.

Entrance Counseling: Federal Direct Loan Entrance Counseling is required for all new and returning borrowers.

Direct Loan Account Information: Online account and billing information.

Loan Consolidation: Consolidate your FFELP loans with your Direct Loans when you graduate if desired.


Student Lending Some Facts to Consider

You have worked hard in school and the work has paid off because you have been admitted to the college of your choice. Now you have a new challenge: how are you going to pay for your education?

  • 14 million student financial aid applications are processed each year.

If you or your parents apply for student loans, here are some basics to keep in mind and questions to ask of your school and lender. To apply for student financial assistance, students complete a Free Application for Federal Student Aid (FAFSA). Students use this application to apply for federal student grants, work study aid and loans as well as most state and private aid.


Facts to consider – some basics.

If you have been awarded financial aid at your school, you will receive a financial aid award letter. This letter may contain a range of financial aid options, including grants (which you do not have to pay back), loans (which you do have to pay back) and work-study (employment at the school). Among the loans that may be offered to you are Stafford loans (either subsidized or unsubsidized) and PLUS loans (usually taken out by either parents of undergraduates or by graduate students themselves). These loans are guaranteed by the federal government and are known as Title IV loans. In addition, your award letter, or your school’s financial aid office, may suggest that you finance a part of the cost of attendance with alternative loans from private lenders. These loans are neither subsidized nor guaranteed by the federal government.


Student Loan Options in a Tight Credit Market

The current credit crunch has students and parents concerned about whether they will be able to get the loans they need to cover college costs. The good news is that Federal Direct Student Loans are and will remain widely available to students and families at all income levels. These loans come with government-guaranteed benefits: affordable, fixed interest rates; substantial borrower protections; and new repayment and forgiveness options. However, the small percentage of undergraduates who use private, non-federal loans are likely to face stricter credit standards and possibly higher prices. Students and parents should only consider private loans as a last resort because of their high risks and costs.

To help people make the most of their student loan options, here are practical and creative answers to some of the most common questions and concerns.

Common Concern

Actual Options

“I’m not needy enough for government grants or loans.” Federal Stafford loans are available regardless of family income. The rate is fixed (currently 6.8%) and comes with a wide range of repayment options. Depending on your level of need, you may be charged interest while in school, but these loans are still much safer than private loans.
“I don’t have a good credit record.” There is no credit requirement or credit check to get a federal Stafford loan.
“I need more than the maximum Stafford loan.” Ask the college if it has any federal Perkins loans or other types of aid, including grants and scholarships, for students like you.
“The school has no Perkins funds available to supplement my Stafford loan.” If you have good grades and there is a remote chance you might someday be a teacher, you can get a federal TEACH Grant – which is actually a type of Stafford loan.
“I don’t qualify for a TEACH grant.” Most parents can get a federal PLUS loan (at a fixed rate of around 8%) for any costs not already covered by grants and your own loans.
“My parents don’t want to borrow.” Offer to split the cost of repaying a PLUS loan with your parents, and put it in writing. If they have good credit, another option is for them to cosign a private loan for you – this may help you get a good interest rate, but is still riskier for both you and your parents than federal loans.
“My parents don’t want to put their income information on the FAFSA.” There is no federal requirement to fill out a FAFSA to get a parent PLUS loan, although some colleges require it. Contact your financial aid office to learn about your college’s policy and how to proceed.
“My parents were denied a PLUS loan because they were delinquent on their mortgage. They tried two different lenders.” If your parents have serious credit problems and can’t get a PLUS loan, the financial aid officials at your school can double your eligibility for federal Stafford loans. If your new undergraduate Stafford maximum of $46,000 is still not enough, consider other ways to reduce costs, including other schools.
“I can’t apply for federal aid because I’m not in contact with my parents.” Talk to the financial aid officials at your college. Depending on your situation, they may be able to override the requirement to provide your parent’s financial information.

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