Financial
Aid - Loan Programs
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Scholarships and Financial Aid Web Site
Loan
Programs
Federal Perkins Loan
William
D. Ford Direct Loan Program
Loan
Programs
Several loan programs are available. A student is not
required to accept a loan in order to receive other types of
aid. Students should consider replacing part of the value of a
loan with a job. Contact Student Employment to
determine whether employment is available.
Students
accepting student loans are committing themselves to a serious
legal and moral obligation: loans must be repaid. Repayment
may take ten years or longer after leaving Central Michigan
University. Students are urged to consider their ability to
repay a loan, their future credit rating, and their potential
indebtedness before accepting a loan. The staff of the OSFA
are available to discuss the implications of loans on the
student's future financial situation.
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Federal
Perkins Loan
Federal Perkins Loans are offered to full-time
students who are U.S. citizens or permanent residents.
Students may borrow up to $4,000 annually, $20,000 total for
undergraduate study. The Perkins Loan is intended for students
who have exceptional financial need. Because of limited
funding, preference is given to undergraduate student
applicants.
Loan
Stipulations
No interest is charged on this loan while the student
maintains at least half-time status, but five percent interest
is charged beginning nine months after the student leaves
school. The student has up to ten years to repay the loan
after leaving school, depending on the amount that was
borrowed. Deferment of repayment is allowed for additional
graduate work and for military, Peace Corps, and VISTA
service; officers in the Commissioned Corps of the Public
Health Service; law enforcement services; full-time volunteers
in some non-profit organizations, serving required internship
for professional practice or service; and certain types of
disability cases. Up to 100 percent of the loan may be
canceled for a student who becomes a special education teacher
or a teacher in an economically and culturally deprived area.
The promissory note contains more detailed information.
Once
offered, Federal Perkins Loan money will not be credited to
the student’s account until the promissory note is
completed, signed and returned to the OSFA. Normally the loan
will be divided and credited equally to the Fall and Spring
portions of the university billing statement.
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Typical
Loan Repayment Schedules
The following tables represent typical repayment schedules
for student borrowers of Federal Perkins Loans. Borrowers
should read the promissory note carefully to ensure that they
fully understand the terms of the loan before the loan is
accepted. Typically, Federal Perkins Loan payments are made
every quarter.
|
Quarterly
Federal Perkins Loan Payments (5 percent) |
|
Amount
Borrowed |
Amount
of Payment |
Number
of Payments |
|
$1,000 |
$120.00 |
13 |
|
2,000 |
120.00 |
27 |
|
3,000 |
120.00 |
40 |
|
4,000 |
128.00 |
40 |
|
5,000 |
160.00 |
40 |
|
6,000 |
192.00 |
40 |
|
7,000 |
223.00 |
40 |
|
8,000 |
255.00 |
40 |
|
9,000 |
287.00 |
40 |
|
10,000 |
319.00 |
40 |
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Loan Exit Interviews
Federal regulations and university policy require students
who have taken a Federal Perkins Loan to attend a loan
interview before graduating or withdrawing from the
university. Important information concerning repayment
schedules and deferment and cancellation provisions will be
discussed. Students must attend and should contact the Loan
Accounting Office, 105 Warriner Hall to arrange for the
interview immediately before leaving the university. A hold on
transcripts and future registration will be placed on those
who do not complete the exit interview.
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William
D. Ford Federal Direct Loan Program
Subsidized
Loans
Subsidized loans are made to students by the federal
government and applied directly to the students' accounts.
These loans are based on need, and eligibility is determined
by the OSFA. All applicants must file a FAFSA. Loan
applications are not required. CMU will initiate processing
unless the student declines the suggested Federal Direct Loan
on the award statement.
Undergraduate
students making satisfactory academic progress who carry at
least six (6) semester hours may borrow up to $2625 for the
first year of undergraduate study, $3,500 for the second year,
and $5,500 for subsequent years of undergraduate study,
depending on financial need. The aggregate maximum for
undergraduate study is $23,000. Graduate students making
satisfactory academic progress who carry at least five (5)
semester hours may borrow up to $8,500 per year, or up to
their financial need, whichever is less. The aggregate maximum
for undergraduate and graduate study combined is $65,500.
Application is usually made for one semester or an academic
year (9 months), with summer school requiring a separate
award.
Borrowers,
beginning July 1, 1998, may borrow at an annual variable
interest rate based on the 91-day Treasury bills plus 2.3
percent, capped at 8.25 percent. There is a 3 percent
origination fee deducted from the loan amount.
Six
months after ceasing to be at least a half-time student, the
borrower must begin repayment. Several repayment options are
available; contact the federal servicer. Payment of principal
may be deferred under certain conditions. Refer to your
promissory notes for details.
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Unsubsidized
Student Loans
Provisions are the same as the Federal Direct Subsidized
Loans, except that the loan is not based on need. The program
is open to students who do not qualify for the Federal Direct
Subsidized Loans or who do not qualify for the full amount.
The student is responsible for the interest that accrues while
he/she is in school. Independent students may borrow the
Federal Direct Subsidized Loan limits as well as an additional
Federal Direct Unsubsidized Loan up to $4,000 per year for
freshmen and sophomores, up to $5,000 per year for other
independent undergraduates, and up to $10,000 per year for
graduate students. The repayment interest rate is the same as
the Direct Subsidized Loan. Beginning July 1, 1998, the
interest rate that borrowers pay while in school is an annual
variable rate based on the 91-day Treasury bill, plus 1.7
percent, capped at 8.25%. There is an origination fee of 3
percent.
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Direct
PLUS (Parent) Loans
The Federal Direct PLUS Loan program makes loans at an
annual variable interest rate, not to exceed 9 percent, to pay
for the costs of study at postsecondary schools. Repayment
begins within 60 days after the loan has been fully disbursed.
Under the program parents are eligible to borrow on behalf of
dependent undergraduate students. Loan funds may be used only
to pay for students’ educational costs. The maximum
eligibility for a Federal PLUS equals the cost of attendance
minus estimated financial aid for the loan period. All
applicants must file a FAFSA for the student for whom they
wish to borrow. Processing will be initiated when the parent
borrower provides requested information for the promissory
note. Upon receipt of the signed promissory note, funds will
be deposited to the student's account. The federal servicer is
required to check the credit worthiness of all Federal Direct
PLUS Loans applicants.
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Loan
Counseling
Entrance Interviews. Students who have applied for
a Federal Direct Student Loan as a first-time borrower are
required by federal regulations to attend an entrance
interview before their loan funds may be applied to their
accounts. Important information on loans, debt management,
repayment options and consequences of default will be
presented. Information regarding this mandatory session is
enclosed with the student’s award package.
Exit
Interviews. Students who receive a Federal Direct Loan are
required by federal regulations to attend a loan interview
before graduating or withdrawing from the university.
Important information regarding deferment and payment
schedules will be discussed. Students must contact the OSFA,
located in Warriner Hall, to arrange for an interview before
leaving the university. During exit counseling CMU is required
to obtain the following information from the borrower:
-
expected
permanent address
-
name
and address of the borrower's expected employer
-
address
of the borrower's next of kin
-
any
corrections to CMU's records concerning name, address,
social security number, references, and driver's license
number
For
Federal Direct loans, CMU is required to provide the above
information to the federal servicer within 60 days of the exit
counseling session.
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