Loan Products and Definitions
Direct Stafford Loans
Interest on these loans begins to accrue upon disbursement. Completion of the FAFSA is a prerequisite for receiving aid. The Stafford program annual loan limit is $20,500 and the aggregate loan limit is $138,500 in total. The current interest rate is 6.21%. Prepayment of student loans is permitted without penalty. Multiple repayment options are available with the standard repayment option spread over 10 years.
Direct Graduate Plus Loans
These loans are credit-based and designed to supplement Stafford Loans for up to the Cost of Attendance. The interest rate for Direct Lending is 7.21%.
There are loan fees associated with student loans and these are deducted from the proceeds that are posted to the student account. The 2014-2015 fees are 1.072% for Stafford and 4.288% for Plus loans. New loan fees for applications originated after October 1, 2014 will increase to 1.073% for Stafford and 4.292% for Plus.
Credit approval is based on federally-mandated criteria. In order to obtain credit-based loans (i.e. Plus or Private), credit approval is required. Credit submission is performed during the process of applying for the Plus loan. Items which affect credit decisions are: delinquencies, foreclosures, bankruptcy, tax liens.
Credit denial information from a credit submission is not made available to MiSPP. The Plus Loan Borrower Services phone number is 800-557-7394. If denied, students are directed to obtain their credit report and correct deficiencies that are preventing approval. A free annual credit report is available one time per year at www.annualcreditreport.com.
Direct Lending offers an endorser option so that a credit worthy borrower may co-sign a loan. Contact the Financial Aid Office for a loan identification code to obtain an endorser.
Private loans may not be consolidated (re-financed) with Direct Loans. Variable interest rates plus 3 to 14% additional interest points/fees, dependent on credit score, may apply.
Your Student Loan
Financial aid recipients attending MiSPP must complete exit counseling for federal loans prior to graduating, and when enrollment status is less than half-time. This counseling exercise is mandated by federal regulations. Through counseling you will receive loan information, repayment options, loan consolidation information, and budget planning assistance. You will be asked to provide personal references and driver’s license number.
The National Student Loan database houses a record of your federal student loans. Private loans are not included in this listing.
In general, 10 to 25 year plans will repay your loan. Your loan servicer will notify you of the date your first payment is due. If you do not choose a repayment plan, you will be placed on the standard repayment plan, with fixed monthly payments for up to 10 years. While the standard repayment plan is the fastest and least-expensive repayment, alternative payment plans for borrowers with high debt or those who need to make lower payments are available. For further questions about repayment plans, view the links provided and contact your loan servicer.
Income-Based Repayment (IBR) is a repayment plan for the major types of federal student loans that caps your required monthly payment at an amount intended to be affordable based on your income and family size.
Effective December 2012, another income-based repayment plan is PAYE (Pay as you Earn) for disbursements after October 2011. Loans consolidated through Direct Consolidation are eligible for PAYE and Parent Plus loans are not eligible for PAYE. Electronic application for income-based repayment is located at www.studentloans.gov.
All Stafford, PLUS and Consolidation Loans made under either the Direct Loan or FFEL Program are eligible for repayment under IBR, except loans that are currently in default, parent PLUS Loans (PLUS Loans that were made to parent borrowers), or Consolidation Loans that repaid parent PLUS Loans. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).
Within 30 days of the expected graduation date, students are provided exit packages by the Financial Aid office. The Department of Education requires that MiSPP federal loan borrowers complete exit counseling prior to graduation, or if enrollment falls below half-time. Exit counseling allows students to update contact information and review various repayment options. Completion of Exit Counseling is a requirement of the MiSPP graduation checklist. Visit Graduate Exit Counseling.
It is recommended that students establish a user ID and password to manage loans and stay informed of the student loan debt. Students may, but are not required to make payments on student loans while enrolled in school without penalty. To notify a lender of an in-school deferment, students should use the In-School Deferment Request form from the Department of Education.
Educational Loans Code of Conduct
MiSPP’s code of conduct for education loans prohibits a conflict of interest with the responsibilities of MiSPP personnel in respect to educational loans. In the awarding of student financial aid and loan processing, MiSPP personnel support practices that ban conflicts of interest.
The following actions are prohibited:
- revenue-sharing arrangements with any lender;
- receiving gifts from a lender (guarantor or loan servicer);
- contracting arrangement providing financial benefit from any lender or affiliate of a lender;
- directing potential borrowers to a particular lender, or refusing or delaying a loan certification;
- offers of funds for private loans;
- financial aid office staffing assistance; and
- advisory board compensation.