|
1. Why is St. Gregory's University switching from the FFELP Stafford Loan program to the Federal Direct Loan Program?
On March 26, Congress and President Obama officially ended the Federal Family Education Loan Program that provided authorization for lenders to make the Federal Stafford and PLUS Loans. Beginning July 1, 2010, the lender based Federal Stafford and PLUS loan programs will be replaced by the Federal Direct Loan program at every participating college and university.
2. If I borrowed a FFELP Stafford Loan previously with a private lender, but now must borrow a Direct Loan, do I have to sign a promissory note?
Everyone borrowing the Federal Direct Loan for the first time will have to sign a new promissory note on the U.S. Department of Education's website. If you have never borrowed a FFELP Stafford loan you will need to complete Entrance Counseling online as well. Previous borrowers at SGU who have already received Stafford loans do not have to complete entrance counseling again, but are encouraged to. Once completed, we will certify your loan for disbursement.
3. Are the terms and condition of the Direct Loans the same as the Federal Stafford and PLUS Loans?
The grace period, deferments, repayment periods, and alternate repayment plans are identical with FFELP loans. While the interest rate on the Stafford Loan and Direct Loan are identical, the interest rate on the Federal Direct PLUS loan is 7.9% compared to the 8.5% fixed rate on the FFELP PLUS Loan. The Direct Loan program may also offer you a rebate, which reduces the fee deducted from the loan. Rebate amounts, if any, will be available in June. Note that this rebate is added back to your loan principal if you fail to make your first 12 monthly payments on time when you enter repayment.
4. What is an “Origination Fee”?
The federal government charges Subsidized/Unsubsidized Loan borrowers an origination fee of 2.0% on loans disbursed after July 1, 2008 and 1.5% on loans disbursed after July 1, 2009.
5. If I have both the Federal Stafford and Direct Loans, will I have to make two payments when I enter repayment?
You have the option (and are generally encouraged) to consolidate your Federal Stafford and Direct Loans into a Federal Direct Consolidation loan. The option to consolidate your Federal Stafford Loan and Federal Direct Loan into a consolidation loan while you are still in school was reinstated when the budget reconciliation bill was signed. If you choose to consolidate while in school or before repayment you will lose your 6 month grace period and repayment would begin immediately when you graduate or drop below half-time. If you choose not to consolidate your loans, you would have two payments, just as you would if you borrowed a Stafford Loan from two different lenders. Since most lenders have been selling their Stafford Loans to the U.S. Department of Education, it is likely that your loan will be serviced by the same company servicing Direct Loans, potentially resulting in a single payment anyway. You will, however, have to pay a minimum monthly payment on each loan if you do not combine them into a single consolidation loan.
6. Do I have the option to stay with my current lender and borrow a Federal Stafford Loan?
No. Now that the program has been discontinued by the federal government, your lender cannot offer you a Federal Stafford Loan for the Fall 2010 or Spring 2011 academic year. Commercial lenders will be limited to offering only private, credit-based, market-driven loans.
7. Who would I talk to if I have questions or problems with my Direct Loan?
Your first contact would remain with St. Gregory's University Financial Aid Services. We should be able to resolve most "in-house" issues. Once you go into repayment, most of your communication will be with the loan servicing company assigned to your loan by the U.S. Department of Education. You can track your loans on the National Student Loan Data System at www.nslds.ed.gov. For help in resolving loan issues with lenders, servicers or guarantors contact the Federal Student Loan Ombudsman: http://ombudsman.ed.gov
8. What is the difference between “Subsidized” and “Unsubsidized” loans?
Subsidized Loan eligibility is always based on demonstrated financial need (file the FAFSA) and the interest is paid (or subsidized) by the federal government until you are no longer enrolled at least half-time. Basically, it’s a zero-percent loan while you’re in school and for six (6) months after you leave school.
Unsubsidized Loan eligibility is not contingent upon financial need; however, you must file the FAFSA to be considered for an Unsubsidized Loan. As the borrower, you (the student) are responsible for the interest on an unsubsidized loan while in school.
9. What is a “Grace Period”?
After you graduate, leave school, or drop below half-time enrollment, you have a six-month period, called the grace period, before you begin repayment on a Direct Subsidized or Unsubsidized Loan. If you return to school at least half-time before your grace period ends, repayment of your loan will again be delayed until six months after you leave school.
|
