Shaw University

Participating in William D. Ford Federal Direct Loan Program [Effective Fall 2010] Shaw University believes that students and parents want some guidance when borrowing student and parent loans. Shaw University elected to participate in the William D. Ford Federal Direct Loan Program because it is considered by many to be the most cost effective way of delivering educational loans to students and parents.

Before you Borrow

Choosing to borrow an educational loan is a decision that you should consider seriously before entering into a loan agreement.

Loans can be a wonderful way to make attending college possible, but many students enter into loan agreements without fully understanding the consequences of their decisions.

1. Is a federal loan best for me?

Federal loans, including Direct Stafford loans, Direct PLUS loans, and Perkins loans, are generally the best options and should be your first consideration.

The maximum interest rates and fees on these loans are set by federal law, so the terms and conditions for these loans are clearly defined and will not change over time.

Private loans, also known as alternative loans, offer another type of loan.

Sometimes students choose to borrow private loans because they believe it's a simpler option. (You don't have to fill out a FAFSA in order to borrow, the funds are sometimes sent directly to you, and our office may not even have to certify the loan).

You will pay a price for that convenience - in the form of very high interest rates and high loan fees.

Often, students commit to these loans without even knowing the interest rates or repayment terms.

Before you apply for a loan that you don't fully understand, contact our staff to see if there might be better options for you.

2. How much should I borrow?

You should never borrow more than you absolutely need to attend school.

Loans certified by the financial aid staff cannot exceed the estimated cost of attendance figures used for all students for financial aid purposes (many students find they can live less expensively than their estimated cost of attendance).

Look carefully at your spending habits to see if there are things you can do to save money ( look for ways to save on books and supplies and if you're living off-campus, are there less expensive housing options that you could consider?).

Look for free & inexpensive activities you can do on campus and in the city.

Loans must be repaid when you're no longer enrolled in school, and you need to be very honest about your ability to repay student loan debt based on what you anticipate your future annual income will be.

3.Federal Direct Subsidized Stafford Loans ?

There are two types of Federal Direct Stafford Loans, subsidized and unsubsidized.

Federal Direct Subsidized Stafford Loans are given on the basis of financial need.

Financial need is determined by subtracting the Estimated Family Contribution (EFC), provided from the FAFSA, from the cost of attendance. If your financial need is not fully met through other forms of aid (including grants and scholarships), you are eligible for Direct Subsidized Stafford Loan funds up to the remaining amount of your financial need or up to the loan limits based on your grade level, whichever amount is lower. The Federal Government will pay interest on a Direct Subsidized Stafford Loan while you are in school and during your six-month grace period.

4. Federal Direct Unsubsidized Stafford Loans

If you do not demonstrate financial need or if your need is fully met by other aid funds, and your full cost of attendance is not met by your other aid, you are eligible for a Federal Direct Unsubsidized Stafford Loan. If you accept the Direct Unsubsidized Stafford Loan you will be responsible for paying the interest while in school or you may choose to let the interest accrue.

Loan Limits

Year in School	Academic Year Loan Limits
Freshmen	$3,500
Sophomore	$4,500
Junior	$5,500
Senior	$5,500
Graduate	$20,500

Independent students and dependent students (whose parents were denied for a PLUS loan) are eligible for additional funding through the Federal Direct Unsubsidized Stafford Loan program. Contact your Financial Aid Counselor for more information.

Repayment

Direct Subsidized and Direct Unsubsidized loans have a 6-month grace period that starts the day after you graduate, leave school, or drop below half-time enrollment. You don't have to begin making payments until you grace period ends. There are various repayment options available to borrowers; for more information on these options, please refer to the William D. Ford Federal Direct Loan website at www.studentloans.gov

William D. Ford Federal Direct Parent Loan for Undergraduate Students (PLUS)

Federal Direct PLUS loans are for parents of dependent students enrolled in college. This loan provides additional funds for educational expenses. It allows a creditworthy parent or stepparent of dependent undergraduates to borrow up to the cost of attendance minus any other financial aid received. These loans are available directly from the Federal government under this program and are based on a borrower's credit history rather than financial need. The interest rate on a Direct PLUS loan is a fixed rate of 7.9%. In addition to interest you pay a loan origination fee that is a percentage of the principal amount of each Direct Plus Loan you receive. The fee is deducted before you receive any loan money, so the amount you actually receive will be less than the amount you have to repay. Direct PLUS loans do not require the FAFSA but it is strongly recommended that you complete it in order to be considered for other aid. Students and the parent borrowers must be U.S. citizens or permanent resident aliens and must not have an unresolved default or overpayment owed on Title IV educational loans or grants.

Repayment

Repayment begins 60 days after final disbursement of the loan. The repayment term is generally based on a ten-year plan. Parents may pre-pay their loans in whole or part without penalty. Under certain circumstances, parents may consolidate their federal PLUS loans.

Master Promissory Note

The MPN is a legal document. By signing it, you promise to repay your Federal Direct Loans.

Your MPN is valid for 10 years from the date you sign it if a first disbursement on the note is made within one year of signing.

Changing a loan amount

A parent may choose to reduce or cancel the PLUS loan by

Accepting a lower amount than offered

Reducing it when the loan is approved

Requesting a return of funds to the William D. Ford Federal Direct Loan Program within fourteen days of the time the funds are disbursed to the student's account if the student has not received a refund of a credit balance.

A request to change the loan should be made directly to the Office of Financial Aid in writing as soon as possible.

Disbursements for all William D. Ford Federal Direct Loans

By federal regulations these loans are required to have two disbursements, one at the start of the loan period and one at the midpoint.

Accepting a William D. Ford Federal Direct PLUS Loan

All Direct PLUS borrowers must receive a pre-approval from the William D. Ford Federal Direct Loan Program before the aid office will certify the loan. The William D. Ford Federal Direct Loan Program will notify the aid office of your pre-approval status.

Alternative/Private Loans

A number of major lenders offer credit-worthy students and /or their parents the opportunity to borrow privately in order to meet educational costs not covered by their financial aid awards. In most cases a credit worthy co-signer is required unless the student has significant income. Some require a minimum of half-time enrollment and some require satisfactory academic progress. Families are encouraged to carefully review and consider the terms of any private loans prior to applying. It is important to remain with the same private lender throughout your education, if possible. Shaw University requires that you receive pre-approval and complete the promissory note before the Financial Aid Office will certify your alternative loan. The Financial Aid Office will receive confirmation directly from the lender when you have been credit-approved.

Federal Perkins Loan (Formerly the National Direct/Defense Student Loan - NDSL)

The Federal Perkins Loan is a federal loan administered by Shaw University to provide long-term (maximum ten-year repayment plan), low interest (5%) loan funds for education expenses to students with "exceptional financial need." No interest or repayment is required while the student is enrolled at least half-time in undergraduate or graduate school. Under this program, students may borrow up to $5,000 per year to finance their educational expenses. Loans generally range from $500 to $5,000 per year. Due to extremely limited funding, these federal loans are awarded to students with exceptional circumstance and need. Graduate/professional students may receive up to $5,000 per year to a maximum of $40,000 (including any Perkins money borrowed at the undergraduate level). The total amount borrowed cannot exceed $20,000 for undergraduate students. Repayment begins nine months after graduation or after the student ceases to be enrolled on at least a half-time basis. Borrowers are required to receive Exit Loan Counseling when enrolled less than half-time or upon graduation. These sessions are conducted by the Collections' Office.