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Foster Youth

Loans

Page Contents

Federal Direct Loan Program for Students and Parent
- Loan Terms
- Direct Loan Program Comparison Table
Federal Perkins Loan
Consolidation Loan
Loan Cancellation and Deferment Options
- For Teachers:
  - The Assumption Program of Loans for Education (APLE)
- For Volunteers
Alternative Loans
- How to apply
- When to apply
- Choosing an alternative loan lender
- Alternative loan disbursement
- Non-school certified alternative loans
- Reporting your alternative loan to SDSU
Useful Web sites

Loans may be included as part of your financial aid award. Loans provide you (or your parent, if you are dependent) with the opportunity to borrow funds to meet your educational expenses.

Before borrowing, explore all other options available including work, scholarships, and grant assistance.

Loans must be repaid.

To find out if you have any loan eligibility, check your financial aid award on AidLink.

Federal Direct Loan Program for Student and Parents

SDSU participates in the Federal Direct Student Loan (Direct Loan) Program, which provides long-term, low-interest loans borrowed directly from the U.S. Department of Education.

Your award may include:

subsidized and/or unsubsidized Direct Loans
Parent PLUS Loan eligibility if you are a dependent undergraduate student,
a Grad PLUS Loan if you are a graduate student.

Loan Terms

Capitalization – adding unpaid interest to the loan principal – increases the principal amount of the loan and its total cost.
Deferment – a postponement of payment on a loan that is allowed under certain conditions and during which interest does not accrue for subsidized loans.
Grace period – a 6-month period before the first payment must be made on a subsidized or unsubsidized loan. The grace period begins the day after the student ceases to be enrolled at least half-time.
Interest – an expense of borrowing money that is calculated as a percentage of the amount borrowed.
Interest rebate - a percentage of the loan fee that the borrower retains by making the first 12 monthly payments on time.
Loan fee – an expense of borrowing deducted proportionately from each loan disbursement.
Principal balance – the amount owed on a loan or loans at any given time (may include capitalized interest - see Capitalization).
Repayment – the period during which a borrower is obligated to make payment on his or her loan(s).

Direct Loan Program Comparison Tables
Subsidized Loan Award is based on need.	Unsubsidized Loan Award is NOT based on need.
Student borrows and is responsible for loan.	Student borrows and is responsible for loan.
Enrollment requirement: Must be enrolled at least half time.	Enrollment requirement: Must be enrolled at least half time.
Loan Fee: 1.5% reduced to 0.5% of the amount borrowed as an interest rebate* on loans first disbursed between July 1, 2009, and June 30, 2010. 2.0% reduced to 0.5% of the amount borrowed as an interest rebate* on loans first disbursed between July 1, 2008, and June 30, 2009. * Borrower retains the interest rebate by making the first 12 monthly payments on time.	Loan Fee: 1.5% reduced to 0.5% of the amount borrowed as an interest rebate* on loans first disbursed between July 1, 2009, and June 30, 2010. 2.0% reduced to 0.5% of the amount borrowed as an interest rebate* on loans first disbursed between July 1, 2008, and June 30, 2009. * Borrower retains the interest rebate by making the first 12 monthly payments on time.
Interest Rate for Undergraduate Student: 5.6% fixed rate on loans disbursed July 1, 2009, through June 30, 2010. 6.0% fixed rate on loans disbursed July 1, 2008, through June 30, 2009.	Interest Rate for Undergraduate Student: 6.8% fixed rate
Interest Rate for Teaching Credential or Graduate Students: 6.8% fixed rate	Interest Rate for Teaching Credential or Graduate Students: 6.8% fixed rate
Capitalized Interest – no interest is charged while student is in school at least half-time, during grace and during deferment periods.	Capitalized Interest – interest is charged during all periods.
Repayment – begins after grace period ends	Repayment - begins after grace period ends

Grad PLUS Loan Award is NOT based on need.	Parent PLUS Loan Award is NOT based on need.
Conditions of Eligibility — Graduate student can borrow up to his/her cost of attendance excluding other financial aid, resources and the annual subsidized and/or unsubsidized loan limits ($20,500). Graduate student should have already activated his/her annual subsidized and unsubsidized loans. Graduate student cannot have an adverse credit history	Conditions of Eligibility — Parent can borrow up to the student's cost of attendance excluding other financial aid, resources and the student's annual subsidized and/or unsubsidized loan eligibility. Parent can borrow to pay for student's educational expenses IF student is a dependent undergraduate enrolled at least half-time. Parent cannot have an adverse credit history.
Enrollment requirement: Must be enrolled at least half time.	Enrollment requirement: Must be enrolled at least half time.
Loan Fee - 4% which is adjusted down by a 1.5% repayment rebate.	Loan Fee - 4% which is adjusted down by a 1.5% repayment rebate.
Interest Rate - 7.9% fixed rate.	Interest Rate - 7.9% fixed rate.
Capitalized Interest – interest begins to accumulate at the time the first disbursement is made.	Capitalized Interest – interest begins to accumulate at the time the first disbursement is made.
Repayment — Usually begins within 60 days after the loan is fully disbursed (typically the spring term). There is no grace period for this loan. On loans borrowed through June 30, 2009: You must repay both principal and interest while you are in school. On loans borrowed on or after July 1, 2009: You may receive a deferment while enrolled at least half-time at an eligible school. Interest accumulates and capitalizes while in deferment.	Repayment — Usually begins within 60 days after the loan is fully disbursed (typically the spring term). On loans borrowed through June 30, 2008: Parent must repay both principal and interest while the student is in school On loans borrowed on or after July 1, 2008: Parent may request deferment of repayment while the student is enrolled at least half time. Interest accumulates and capitalizes while in deferment.

Refer to Funding Education Beyond High School: The Guide to Federal Student Aid from the U.S. Department of Education for more information on federal loans, including:

sample repayment schedules, and
deferment and cancellation provisions under the Peace Corps Act, the Domestic Volunteer Services Act of 1973, and comparable service as a volunteer for a tax exempt organization that is effective in community service.

Federal Perkins Loan

A Federal Perkins Loan is a low-interest loan (5%) for eligible undergraduate and graduate students with exceptional financial need. SDSU is the lender on the Perkins Loan. The loan is made from federal government funds and SDSU funds. Qualified recipients of a Federal Perkins Loan, will receive detailed information and instructions on how to apply by logging on to AidLink.

For information on the Federal Perkins Loan, go to the Funding Education Beyond High School: The Guide to Federal Student Aid from the U.S. Department of Education.

Consolidation Loan

A Consolidation Loan can help you (and your parents, if they borrowed for you) simplify loan repayment by allowing you (or your parents) to combine several types of federal student loans with various repayment schedules into one loan. The repayment process is simpler—

you make only one payment a month
the interest rate on the Consolidation Loan might be lower than what you are currently paying on your current loan(s)

For information on loan consolidation: http://www.loanconsolidation.ed.gov.

Loan Cancellation and Deferment Options

For Teachers

The Assumption Program of Loans for Education (APLE)
APLE is a state-funded program administered by the California Student Aid Commission (CSAC). You may be able to defer payment of or have a portion of your outstanding loan balance forgiven if you meet the teaching guidelines designated by the U.S. Department of Education.

Find more information about APLE and the Federal Cancellation and Deferment Option.

For Volunteers

You may be eligible for loan deferment or cancellation under the provisions of the Peace Corps Act, the Domestic Volunteer Services Act of 1973, and comparable service as a volunteer within a tax-exempt organization active in community service.

Alternative Loans

Alternative loans (private loans) are useful if you need to find another source of assistance.

Private loans are more expensive than government loans and should only be used when you have exhausted all other options. Borrow your limit in government loans before seeking a private loan.

How to apply

SDSU will only certify an alternative loan if—

you are an SDSU student enrolled at least half time
you complete a Free Application for Federal Student Aid (FAFSA) which enables us to determine any federal and state financial aid that may be available to you.

An alternative loan, certified or not certified by SDSU, is a resource that you must report to the Office of Financial Aid and Scholarships. We will coordinate your alternative loan with the other aid you are receiving.

If you receive an alternative loan after receiving other financial aid for the semester, you may be required to repay some of all of the aid you receive. The total of all financial aid and other resources cannot exceed your cost of attendance.

When to apply

Complete the FAFSA each year as soon after January 1 as possible.

The credit check with your lender usually expires within 60 days. The Office of Financial Aid and Scholarships does not begin alternative loan processing for the academic year until August. Therefore, complete the FAFSA early but do not apply for the alternative loan until June or after.

Choosing an alternative loan lender

We do not recommend or endorse any particular lender and you may choose any lender you wish. To get you started, we offer these guidelines to help you determine which, if any, alternative loan is right for you.

Begin by contacting the bank or credit union you use for your personal banking needs. Compare the terms of their loans with others that you research.
Choose an actual bank or credit union, one that offers checking/savings accounts, credit cards and different types of loans. Banks are governed by banking industry regulations helping to make their practices more consistent and stable. In the current lending climate, where the subprime mortgage crisis is beginning to spill over into student lending, smaller banks and non-bank student loan companies are becoming unstable and are in some cases even closing down permanently.
Choose a lender that has been in business for a long time. You will be doing business with the lender for the next 5 to 20 years (until the loan is paid in full) and may want to choose a lender that has been around at least that long.
Choose a lender that services its own loans. Ask the lender if the product is their own loan or if they are just reselling a loan that is actually serviced or guaranteed by another lender or agency. Ask if they will service the loan until it is paid in full, or if they sell their promissory notes to another lender or loan servicing agency after collecting the loan processing fees. You should know with whom you will be doing business, now and when you repay your loan.
Compare private loan terms with the terms of the Federal Parent PLUS Loan. A PLUS is usually less expensive and has better repayment terms. A new federal regulation now allows parent borrowers to defer repayment on PLUS loans made after July 1, 2008, while their student is enrolled at least half time.
Carefully compare the loan terms from the lenders you research. As a borrower of a private consumer loan, it is your responsibility to research and examine the terms and conditions offered by each lender to determine the right loan for you. Points to consider—
- Compare loan processing fees as well as annual percentage rates. The processing fees vary from lender to lender and some can be as high as 20% of the loan. A loan with a low interest rate but high fees can sometimes cost more than a loan with no fees but a higher interest rate.
- Lenders require a credit check and most require a cosigner.
- Interest rates vary from lender to lender and often depend on your or your cosigner’s credit score.
- The time required to repay the total amount varies. Does the lender offer repayment options? A longer repayment term increases the total amount of interest paid even though the annual percentage rate may be lower than one with a shorter repayment term.
- The lender may or may not offer deferment or a grace period before repayment begins. Remember, with private loans, interest continues to accumulate and may capitalize during deferment. (Capitalized interest is unpaid interest added to the principal amount of your loan and increases the amount you must eventually repay.)
- If you defer repayment, try to make monthly or quarterly interest payments to reduce the amount of capitalized interest.

Alternative loan disbursement

When SDSU processes an alternative loan, the information is sent directly to your lender. Lenders are advised that no loan funds will be disbursed prior to the beginning of each term.

SDSU will only disburse funds for an alternative loan if —

you are an SDSU student enrolled at least half-time,
you complete a Free Application for Federal Student Aid (FAFSA) which enables us to create a record for you and determine any federal and state financial aid that may be available for you,
you are listed as the borrower on the loan and the check is made payable only to you (or co-payable to you and SDSU) because SDSU does not participate in private loan programs that allow parents or third parties to borrow a loan on behalf of the student, and
the alternative loan will be directly deposited to your designated bank account or mailed to you at the address indicated in your WebPortal.

Non-school certified alternative loans

There are student loans that do not require completion and signature by a school's financial aid officer. You might want to consider this type of loan if you—

are not a United States citizen or permanent resident,
are not making satisfactory academic progress, or
are enrolled less than half time.

The requirements and terms vary from lender to lender, so carefully compare the terms of the lenders that you consider.

Non-school certified alternative loans should be disbursed by the lender directly to you and not through SDSU.

Reporting your alternative loan to SDSU

An alternative loan, certified or not certified by SDSU, is a resource that you must report to the Office of Financial Aid and Scholarships.

We will coordinate your alternative loan with the other aid you are receiving. If you receive an alternative loan after receiving other financial aid for the semester, you may be required to repay some of all of the aid you receive.

The total of all financial aid and other resources cannot exceed your cost of attendance.

Useful Web Sites

The Direct Loan Web site includes an online repayment plan calculator to help you figure out what your payments could be before you commit to borrowing: www.direct.ed.gov/

General student loan repayment information: http://studentaid.ed.gov/PORTALSWebApp/students/english/repaying.jsp?tab=repaying

Direct Loan Servicing Center - access your loan account record (Federal Student Aid PIN required):www.dl.ed.gov

Review your aid history on the Department of Education's National Student Loan Data System (NSLDS): www.nslds.ed.gov

Electronic Master Promissory Notes for Subsidized and Unsubsidized Loans or PLUS Loans: http://dlenote.ed.gov

Information on Direct Loan Consolidation: www.loanconsolidation.ed.gov

Information on establishing and managing credit: www.studentdebthelp.org