GENERAL INFORMATION

WHAT IS A FEDERAL DIRECT LOAN?

Congress established the William D. Ford Federal Direct Loan Program (Direct Loans) to reduce the complexity within the financial aid process. The difference between the Direct Loan Program and the Federal Family Education Loan Program (FFELP), is that the Direct Loan Program does not involve the use of a private lender such as a bank. You are borrowing from the federal government.

WHAT IS A FEDERAL PLUS LOAN?

The Federal PLUS is a loan for the natural, adoptive, or step-parent of dependent undergraduate students to help pay for their dependent child’s education. The Federal PLUS Loan is not based on financial need; however, SPC requires the completion of the Free Application for Federal Student Aid (FAFSA) before processing a loan.

The PLUS Loan has a federal origination fee of up to 4% with a 1.5% rebate. A 2.5% fee will be deducted from the loan proceeds before the funds are applied to the student's tuition account. Once in repayment, you will need to make 12 consecutive payments or the 1.5% rebate will be added back to your loan obligation.

Interest begins to accumulate at the time the first disbursement is made. The interest rate on a PLUS loan is fixed at 7.9%.

A credit check is required for a PLUS credit approval.  If a parent’s credit check is denied, federal regulations allow the student to borrow additional Unsubsidized Stafford Loan funds. Financial Assistance Services will receive notification of the denial. The student can then request additional unsubsidized loan funds.

Federal Parent Direct Loan (PLUS) Process

HOW MUCH YOU CAN BORROW

Parents may borrow the full yearly cost of the student’s education (the Cost of Attendance is established by Financial Assistance Services), minus all other eligible financial aid. There is no cumulative borrowing limit.

Consistent with federal regulations, Direct Stafford Loans have an origination fee of up to 2.0 percent with a 1.5 percentage rebate. A 0.5 percentage fee will be deducted from the loan proceeds before the funds are applied to your student account. Once in repayment, you will need to make 12 consecutive payments or the 1.5 percentage rebate will be added back to your loan obligation.

WHAT YOU NEED TO APPLY FOR A LOAN

To be considered for a Federal Direct Loan, you must:

Complete a FREE APPLICATION FOR FEDERAL STUDENT AID (FAFSA)

Obtain a FEDERAL PERSONAL IDENTIFICATION NUMBER (PIN)

Meet all other criteria applicable to federal aid programs including:

HOW TO APPLY FOR A FEDERAL PLUS DIRECT LOAN

HOW YOU ARE NOTIFIED

Financial Assistance Services will notify your son or daughter of the award via letter and SPC e-mail. Your child can also view the award through the awards link in MySPC. Once you log in, you will select view/accept awards. From this page, you will have the option of accepting the full amount, reducing the amount, or cancelling the loan completely. Awards are determined on an ongoing basis and completed after your financial aid file is complete. To be complete, your child must respond to all requests for additional information and we must be in receipt of your signed Master Promissory Note.

Please notify Financial Assistance Services if you change your mind and decide not to participate in the Federal Direct Student Loan Program. You can cancel your loan up to 30 days after your loan is applied to your students' account by contacting a Financial Assistance Counselor or sending your request to askfas@spcollege.edu.

HOW YOUR LOAN FUNDS ARE DISBURSED TO YOU

All loans are disbursed in two payments. If the total financial aid award exceeds your child's tuition and fees, they may purchase their books with the remaining loan balance. The amount your child will be eligible for depends upon the amount of your tuition/fees less aid awarded.  The balance, up to $800, will be available at the bookstore in the form of a Book Line of Credit. The bookstore will have your information on file and will apply your available book charges against your child's tuition account. Any remaining credit balances will applied to your child's SPC OneCard within three days of being credited on their student account, starting at the end of the fourth week of their classes.

WHEN DO I START REPAYING MY LOAN

The basic repayment term for the Federal PLUS is 10 years.  Repayment of the PLUS loan typically begins 60 days after the final loan disbursement unless other arrangements are made. Parents can choose to have the repayment of the PLUS loan deferred until six months after the student graduates, withdraws, or drops below 6 credit hours. Interest that accrues during that time can be paid monthly or quarterly, otherwise it will be capitalized quarterly.

Estimate your loan payments with this Student Loan Calculator.

HOW CAN I LEARN ABOUT MY STUDENT LOANS

Direct Loan Borrower Services

When your loan is due, the federal loan servicer will mail you a payment schedule listing your monthly payment of principal and interest and the unpaid balance for each month of the period it takes to repay your total debt. If they do not contact you, you are responsible for contacting them at: U.S. Department of Education, Borrower Services Dept., Direct Loan Servicing Center, P. O. Box 4609, Utica, NY 13504-4609, (800) 848-0979; (800) 848-0983 (TDD). You can also contact Borrower Services on the Web.


National Student Loan Data System (NSLDS)

With your PIN, you can access the National Student Loan Data System (NSLDS). This site contains the history about all of your financial aid including your student loans, including any loans you borrowed through the FFELP Program.

WHAT ARE MY REPAYMENT OPTIONS

The federal government offers various loan repayment options listed below.

• The Standard Repayment Plan requires fixed monthly repayment amount paid over a fixed period of time not to exceed 10 years.
  
  
• The Graduated Repayment Plan established annual repayment amounts at two or more levels over a fixed period of time not to exceed to 10 years.
  
  
• The Extended Repayment Plan assumes a fixed annual or graduated repayment amount to be paid over a period not to exceed 25 years.

More information about repayment can be found at www.borrowersrights.org.

Under certain circumstances, you can received periods of deferment or forbearance that allow you to postpone loan repayment. These periods do not count toward the length of time you have to repay your loan. You cannot get a deferment or forbearance for a loan that is already in default. You must continue making payments on your student loan until you have been notified that a deferment or forbearance has been granted.

A deferment is a period of time during which no payments are required and interest continues to accrue. PLUS borrowers may defer repayment while the student is enrolled at least half-time. To qualify for a deferment, you must meet at least one of the eligibility requirements listed below, with certain conditions. For more detailed information, please consult www.FederalStudentAid.ed.gov

If you temporarily cannot meet your repayment schedule, but you are not eligible for a deferment, your lender might grant you forbearance for a limited and specific period of time. Interest continues to accrue and you are responsible to pay it. Generally, your lender can grant forbearance for periods up to 12 months at a time, for a maximum of three years. You will need to provide documentation to the lender to show why you should be granted forbearance. The lender must send you a notice confirming the terms that were agreed to and records them in your file. Receiving a forbearance is not automatic: you must apply for it.

Default is a serious consequence for not repaying your loans. It will occur if you fail to make a payment for 270 days. The school, the lender or agency that holds your loan, the state and the federal government may all take action to recover the money, including notifying national credit bureaus of your default. This may affect your credit rating for as long as seven years. In addition, the Internal Revenue Service can withhold your US individual income tax refund and apply it to the amount you owe, or the agency holding your loan might ask your employer to deduct payments from your paycheck. Also, you may be liable for loan collection expenses. If you return to school, you are not entitled to receive additional federal student financial aid. Legal action also might be taken against you. In many cases, default can be avoided by submitting a request for a deferment, forbearance, discharge, or cancellation and by providing the required documentation.

Defaulted Student Loan information line: (800) 621-3115