Terms and Conditions Under which Students Receive Federal Loans
The Federal loan programs provide funds to undergraduate and graduate students to assist them in meeting their educational expenses. To qualify for Federal Loan program funds, the student must meet the eligibility requirements for Federal Student Aid as well as the loan program specific terms and conditions specified below:
Federal Direct Loan
- The student (parent in the case of PLUS loans) must complete and sign a valid Master Promissory Note.
- The student must be enrolled at least half-time to receive Direct Loan program funds. A student whose enrollment status is below half-time is not eligible for Direct Loan program funds. If eligibility is lost due to being enrolled less than half-time, a student can regain eligibility if enrolled at least half-time during a subsequent period of enrollment.
- A student who is borrowing a loan for the first time is required to participate in loan entrance counseling prior to the first disbursement of the loan. The first disbursement of a loan cannot be made earlier than 30 days after the start of the term or period of enrollment.
- Financial Aid Administrators may not perform credit checks on students in connection with awarding them Direct Loan program funds, except in cases of graduate PLUS loans.
- A student borrower who is in default on a Federal student loan is not eligible for additional Direct Loan funds unless eligibility is regained by resolving the existing default.
SATISFACTORY ACADEMIC PROGRESS
Students are required to maintain Satisfactory Academic Progress while enrolled at the school. Failure to maintain Satisfactory Academic Progress could result in ineligibility for Federal Student Aid. The Satisfactory Academic Progress information is contained in the school catalog.
FINANCIAL AID LOAN MANAGEMENT
Each first-time student borrower is required to complete loan entrance counseling conducted individually, in a group, or online. The interview will include an explanation of the use of a Master Promissory Note (MPN), the importance of the repayment obligation, a description of the consequences of default, sample repayment schedules, information in reference to borrower’s rights and responsibilities, as well as other terms and conditions.
Upcoming graduates, students who officially withdraw, or students who cease to attend at least half-time will be required to complete the exit counseling session. Students who leave school without attending an exit counseling session will receive an exit counseling package mailed by the campus. Exit counseling addresses topics such as the requirement to repay the loan, repayment plans, updating contact and demographic information, the consequences of default. Please see The Financial Aid Loan Exit Counseling section below for additional information.
Students who receive Federal student loans sign a Master Promissory Note (MPN) which states the student is obligated to repay the student loan funds regardless of the student’s graduation, withdrawal from school, or inability to obtain employment.
The Federal Direct Stafford Loan program offers students many different repayment options. Students are responsible for selecting the appropriate payment plan to suit their needs. The school’s Financial Aid Office is available to review the different repayment options.
If at any time a student becomes delinquent on a loan, it is the student’s responsibility to contact the school or lender to determine what options are available to the student.
The following information will be included in the Loan Entrance Counseling that is available online at http://StudentLoans.gov. First-time student borrowers will be directed to complete entrance counseling prior to the first disbursement of loan funds.
- Explanation and use of the Master Promissory Note (MPN).
- Effect of accepting
- Seriousness and importance of the repayment obligation.
- Option of paying interest on Unsubsidized Stafford and Graduate PLUS loans while in school.
- Interest accrual process and interest capitalization when a borrower elects not to pay interest or if the interest is not paid by the US Department of Education.
- Definition of half-time enrollment.
- Consequences of not maintaining at least half-time enrollment.
- Importance of contacting the appropriate office at the school if the student plans to withdraw before completing the academic program to allow the school to provide exit counseling to the borrower.
- Obligation to repay the loans even if: the borrower does not complete the program or does not complete the program within the regular time for completion, is unable to find employment, is dissatisfied with the school/program, or does not receive the services purchased from the school.
- The importance of repayment and the consequences of default, including adverse credit reports, Federal offset, and other Federal delinquent debt collection procedures and litigation.
- Sample monthly repayment amounts based on a range of levels of indebtedness or the average cumulative indebtedness of other loan borrowers within the same academic program as the borrower.
- Information regarding the National Student Loan Data System (NSLDS) and how a borrower can access and monitor his or her loan records.
- Name and contact information of the person the student can contact with questions regarding rights and responsibilities or loan terms and conditions.
- For first-time borrowers, explanation of the limitation on eligibility for Direct Subsidized Loans and possible borrower responsibility for accruing interest, including: (1) the possible loss of eligibility for additional Direct Subsidized Loans; (2) how a borrower’s maximum eligibility period, remaining eligibility period, and subsidized usage period are calculated; (3) the possibility that the borrower could become responsible for accruing interest on previously received Direct Subsidized Loans and the portion of a Direct Consolidation Loan that repaid a Direct Subsidized Loan during in-school status, the grace period, authorized periods of deferment, and certain periods under the Income-Based Repayment and Pay As You Earn Repayment plans; and (4) the impact of borrower responsibility for accruing interest in the borrower’s total debt.
Students are required to attend a financial aid loan exit counseling session prior to graduating or shortly before ceasing enrollment of at least half-time study. Students who seek withdrawal from the school should see the Financial Aid Office to obtain exit counseling. Several topics presented at the entrance counseling session are again presented at the exit counseling. Exit counseling is required for all graduated, withdrawn, or dismissed students prior to exiting the institution as well when a student ceases to attend at least half-time. If a student leaves school or chooses to postpone their education, the student should meet with a Financial Aid Administrator to understand the financial impact of this decision and to attend loan exit counseling. Exit counseling includes the following information:
- Explanation of all repayment plans available.
- Comparison of each type of repayment plan, including average projected monthly payments and the difference in interest and total payments.
- Explanation of the terms and conditions to obtain full or partial loan forgiveness or discharge.
- Explanation of the terms and conditions under which a borrower may obtain a deferment or forbearance.
- Debt management strategies to assist the student in successful loan repayment.
- Information regarding the average anticipated monthly repayment amount based on the student loan borrower’s actual indebtedness or the average indebtedness of student borrowers in the same academic program receiving the same types of loans.
- A review of the Master Promissory Note (MPN) and the student’s obligation to repay the loan.
- Explanation of the student’s responsibility to repay the loan even if the student did not complete the program, did not complete the program within the regular completion time for that program, is unable to obtain employment, or is dissatisfied with the education received.
- Explanation regarding the consequences of default, including adverse credit reports, Federal offset other Federal delinquent debt collection procedures and litigation under Federal law.
- Effects of loan consolidation, including the effect on total interest and fees to be paid, length of the repayment term, effect on borrower benefits on underlying loans (grace periods, deferment, loan forgiveness, and loan discharge), option to prepay or change repayment plans, and how borrower benefits may differ between lenders.
- Explanation of the tax benefits available to the student.
- Information concerning the National Student Loan Data System (NSLDS) and how the student can use NSLDS to access his or her records.
- Information regarding the services offered by the student loan Ombudsman’s Office.
- Information containing: (1) descriptions of federal student assistance programs, (2) the rights and responsibilities of student and institutional participants, (3) ways in which students and prospective students can assess the debt burden and monthly and total repayment obligations for their loans.
- For first-time borrowers, explanations of (1) how a borrower’s maximum eligibility period, remaining eligibility period, and subsidized usage period are calculated; (2) the sum of the borrower’s subsidized usage periods at the time of exit counseling; (3) the consequences of continued borrowing or enrollment including: (a) the possible loss of eligibility for additional Direct Subsidized Loans and (b) the possibility that the borrower could become responsible for accruing interest on previously received Direct Subsidized Loans and the portion of a Direct Consolidation Loan that repaid a Direct Subsidized Loan during in-school status, the grace period, authorized periods of deferment, and certain periods under the Income-Based Repayment and Pay As You Earn Repayment plans; (4) the impact of borrower becoming responsible for accruing interest on total student debt; and (5) the Department of Education will notify the student borrower whether he or she is responsible for accruing interest on his or her Direct Subsidized Loans.
In addition, the Financial Aid Office is responsible to collect the following information as part of the exit counseling and provide the information to the U.S. Secretary of Education within 60 days of receipt:
- Social Security Number
- Driver’s License Number and State
- Expected Permanent Address
- Name and Address of Next-of-kin
- Name and Address of Known or Expected Employer
Student loan borrowers should visit the Financial Aid Office for the terms and conditions under which they may obtain a deferment for repaying student loan debt.
Loan deferment terms and conditions are further defined for those serving in the Peace Corps; under the Domestic Volunteer Service Act; and as a volunteer for a tax-exempt organization of demonstrated effectiveness in the field of community service. These individuals should visit the Financial Aid Office for additional information.