1. Danchees (D.) Ingram Tarrant County College
Loan Basics
Danchees (D.) Ingram
Tarrant County College

2. Agenda Student loan programs and regulations
Application process and eligibility
Repayment options

3. Federal Student Loans Federal Direct Subsidized Loan
Federal Direct Unsubsidized Loan
Parent PLUS Loan
Graduate PLUS loan
Federal Perkins Loan
Financial aid lingo
Sub = subsidized
Unsub = unsubsidized
PLUS = could be parent or graduate PLUS
These loans are generally part of the award package given to students, so they are offered upfront.
Some institutions do not package the unsubsidized loan. Are any of you from a school that doesn’t package unsub?

4. Federal Direct Subsidized Loan
Need based loan for undergraduates only
Origination fee: 1.066% (as of October 2017)
Fixed interest rate: 4.45% (as of July 2017)
July 1 rate is adjusted for new loans
Grace period: 6 months
Interest does not accrue – paid by Dept. of Ed
Enrolled at least half time
During 6 month grace period
Other types of deferment
Must meet SAP and enroll at least half time
Interest rate is fixed for each individual subsidized loan at the time of origination for the life of the loan. Interests rate may change for any new loans.
*If loan was first disbursed between July 1, 2012 and July 1, 2014, you will be responsible for paying any interest that accrues during your grace period.

5. Federal Direct Unsubsidized Loan
Non-need based loan
Borrowers is undergrad, grad, or professional
Origination fee: 1.066% (as of October 2017)
Fixed interest rate: 4.45 undergrad, 5.84% grad (as of July 2017)
Interest accrues while student is in school
Grace period: 6 months
Interest capitalizes
Student can elect to pay interest while enrolled
Must meet SAP and enroll at least half time
Interest capitalizes – it is added to the principal of the loan and then the student begins to accrue interest on interest.
Students can contact loan servicer if choosing to pay interest while in school.
Highlight differences between sub and unsub.

6. 150% Subsidized Usage Limit Applies (SULA)
Effective 7/1/13 and applies to new borrowers or borrowers with a zero balance taking out a new loan
May only receive Sub for 150% of the published program length
-Published program length as listed in catalog
-MEP = 150% of the published program length
-SUP = amount of time student has received sub
-REP = remaining amount of time student is eligible for sub
-SULA example: If a student is enrolled in a 2 year program, what is their MEP? 3 years. If the student receives subsidized loans for the entire first year, what is their SUP? 1 year. What is the student’s REP? 2 years.
If a student is enrolled in a 4 year program, what is their MEP? 6 years. If the student receives subsidized loans for the entire first and second year, what is their SUP? 2 years. What is the student’s REP? 4 years.

7. Parent PLUS Loan Non-need based loan
Can borrow up to cost of attendance (COA) minus other aid
Borrower is parent of dependent undergrad
Student must be enrolled at least half time
Origination fee: 4.264% (as of October 2017)
Fixed interest rate: 7.00% (as of July 2015)
Credit check required
Additional PLUS loan counseling required for low credit
Additional unsub up to independent limit may be awarded if parent does not pass credit check
Repayment begins after loan is fully disbursed
Parent/Graduate borrower has adverse credit history if…
In addition to other conditions (e.g. bankruptcy, foreclosure, tax lien, default), the applicant has one or more debts that are 90 or more days delinquent or that are in collection or have been charged off during the two years preceding the date of the applicant’s credit report
But only if the total combined outstanding balance of those debts is greater than $2,085
Additional counseling is required for any PLUS applicant who has adverse credit history but who qualifies for a PLUS Loan through the “reconsideration” process or through obtaining an endorser
Reconsideration
Dept of Ed will send s to PLUS application who have been denied a PLUS loan because of adverse credit history, believed to be approved if they request reconsideration of initial PLUS denial. The applicant will be instructed to contact Dept of Ed’s Student Loan Support Center.

8. Graduate PLUS Loan Non-need based loan
Can borrow up to COA minus other aid, no aggregate limit
Borrower is graduate or professional student
Origination fee: 4.264% (as of October 2017)
Fixed interest rate: 6.00% (as of July 2017)
Credit check required
Loan payments deferred while at least half time
6 month grace period, interest continues to accrue
Must be enrolled at least half time

9. Graduate/Professional Student Unsubsidized Loan $20,500/academic year
Dependent Undergraduate Student
Base Eligibility
(Sub or Unsub)
Additional Unsubsidized Loan
Freshman
$3,500
$2,000
Sophomore
$4,500
Junior/Senior
$5,500
$2000
Maximum Total (Aggregate) Limit:
$31,000 ($23,000 can be subsidized)
Independent Undergraduate Student
Base Eligibility
(Sub or Unsub)
Additional Unsubsidized Loan
Freshman
$3,500
$6,000
Sophomore
$4,500
Junior/Senior
$5,500
$7,000
Maximum Total (Aggregate) Limit:
$57,500 ($23,000 can be subsidized)
Note that some health profession programs have different yearly aggregate amounts. Check with your office.
Graduate/Professional Student
Unsubsidized Loan
$20,500/academic year
Maximum Total (Aggregate) Limit:
$138,500 ($65,500 may be subsidized)

10. Direct Loan Application Process
FAFSA
Entrance counseling
First time borrowers informed of their rights and responsibilities
Completed at
Master Promissory note
Includes terms and conditions of the loan disbursement and repayment
Valid for 10 years and covers multiple loans
Completed on

11. Direct Loan Application Process
Master Promissory note
Includes terms and conditions of the loan disbursement and repayment
Valid for 10 years and covers multiple loans
Completed on
Exit Counseling
Information on repayment
Must be complete when student drops below half-time or graduates
Completed on
PLUS loan application at

12. Direct Loan Notification
Institutions are required to notify the borrower within 14 days that a disbursement is made and,
Give the borrower the opportunity to reduce or cancel the disbursement within 14 days

13. Direct Loan Proration Applies to subsidized and unsubsidized loans
Required if:
Student’s academic program is less than 1 year in length
Student’s remaining period of study is less than 1 year in length
Standard proration formula
Example: December graduates.
Actual enrolled hours 24
Amount of direct X loan student could
have for grade level

14. Federal Perkins Loan Need based loan
Borrower is undergrad, grad, or professional
No origination fee
Fixed interest rate: 5%
Interest does not accrue while in school or grace
Grace period: 9 months
Institution is lender and servicer
Must meet SAP and enroll at least half time

15. Federal Perkins Loan Annual Limit: $5,500 undergrad, $8,000 grad/prof
Lifetime Limit: $27,500 undergrad, $60,000 grad/prof
Maximum repayment period is 10 years
Program ending Sept. 30, 2017
See DCL GEN for specifics ( 605.html)
Winding down of Perkins program
DCL GEN – has specifics

16. Alternative Loans Non need based loans
Private banks
State loans (College Access Loan, *B-On-Time Loan)
Fees, interest rates, terms vary
Most require school certification
May require credit check or cosigner
* No new borrowers for B-On-Time Loan
Possible solution for
-International students
-SAP ineligible students
-Non-degree seeking students
-Students who have reached federal aggregate loan limits

17. Student Loan Repayment
Single source with record of all federal loans
Borrower info
Loan amounts
Interest accrued
Servicer info

18. Repayment Plans Standard – 10 years; equal monthly payments
Graduated – 10 years; monthly payments start low and increase every 2 years
Income sensitive repayment – monthly payments based on annual income and change as income changes
Extended – 25 years; fixed or graduated monthly payments
Standard – payments are fixed, at least $50 per month. Less interest will be paid over time under this plan than would be paid under other plans.
Graduated – more interest will be paid over the life of the loan than under the standard plan
ISR: Payment based on annual income, changes as income changes, each lender’s formula for determining payment may vary
Extended – payments will be less than standard plan

19. Income contingent – payments based on annual calculations and adjusted so as not to cause “undue hardship” (25 yr forgiveness)
Income Based – monthly payments will not exceed 15% discretionary income (25 yr forgiveness)
Pay As You Earn – monthly payments will not exceed 10% of discretionary income (20 yr forgiveness); must be new borrower on or after 10/1/07
Revised Pay as You Earn – monthly payments will not exceed 10% of discretionary income (20 yr forgiveness); date limitation does not apply
Repayment Plans
Discretionary income: the amount by which your AGI exceeds 150% of the poverty guideline for your family size.
ICR: Payments based on AGI, family size and total loans, lower payments but more interest
IBR: You must have a partial financial hardship, monthly payments will be lower but more interest will be paid over time, may have to pay income tax on forgiven amount after 25 years
PAYE: must be new borrower on or after 10/1/07

20. Loan Forgiveness
Teacher Loan Forgiveness – up to $17,500 on sub or unsub (Direct or Stafford) loans if teach full-time for 5 complete consecutive years in certain elementary/secondary schools serving low- income families
cancellation/teacher
Public Service Loan Forgiveness – forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for qualifying employer
cancellation/public-service

21. Loan Repayment Terms
Forbearance – Period of time payments are postponed, reduced or extended
Interest accrues
Deferment – Period of time payments are postponed for approved set of reasons
Interest on subsidized loans does not accrue*
Default – payments delinquent for 270 days
Consolidation – Combines loans into one, requiring one monthly payment to one servicer
Can fix defaulted loan
Loan servicer determines eligibility
Forbearance – borrower is willing but unable to pay
Deferment – *subsidized loan interest continues to accrue if loan was first disbursed between July 1, 2012 and July 1, 2014, you will be responsible for paying any interest that accrues during your grace period.
possible reasons for deferment: enrollment, qualifying internship, peace corps, military deployment
Default – borrower could be subject to wage garnishment, seizure of income tax refunds, lottery winnings, license non-renewal, sued by Dept of Ed
-student not eligible for federal financial aid
-damage to borrower’s credit score
-Satisfactory repayment arrangements – 6 on-time voluntary payments
-Rehabilitation – 9 on time voluntary payments

22. Cohort Default Rate (CDR)
Includes Direct Loans and loans underlying DL consolidation loans
CDR = % of borrowers who enter repayment in a given federal fiscal year who then default within the next 3 fiscal years
High rate has consequences for schools
>15% = loss of 1 installment/semester
>15% = 30 day hold on 1st time, 1st year borrowers
>40% = loss of participation in Title IV funding

23. Resources Studentaid.gov IFAP – ifap.ed.gov
FAQs broken down by loan type
Repayment calculators
IFAP – ifap.ed.gov
Handbooks, regulations, current notifications
This site is your best friend! 
YouTube – Federal Student Aid channel
Videos on a variety of topics including repayment

24. Questions?