An education loan is a form of financial aid that must be repaid, with interest. Education loans come in three major categories: student loans (ex. Subsidized Direct Loan), parent loans (ex. PLUS loans) and private loans (also called alternative student loans). 

Few students can afford to pay for college without some form of education financing. As with any  loan, be conservative and only borrow what you absolutely need.

The Financial Awareness Counseling Tool aims to provide students with basic financial management information, such as their current loan debt and estimates of debt level when interest accrues after graduation. Click the link below and follow the directions it provides in order to see your current debt level and estimates of debt level with accrued interest.

https://studentloans.gov/myDirectLoan/financialAwarenessCounselingLanding.action

Loan Limits

Aggregate

An undergraduate dependent student is allowed a total of $31,000, up to $23,000 of that in subsidized loan money. An undergraduate independent student is allowed a total of $57,500, up to $23,000 of that in subsidized monies. Graduate students are allowed a maximum of $138,500 in federal loans.

Annual

Grade level and dependency status on the FAFSA determines the maximum amount a student may receive in federal loans in an award year (Fall, Spring, Summer). The following chart explains shows how much a dependent and independent student can borrow based on their student standing (freshman, sophomore, junior, senior). Student standing is determined by the number of credits the student has completed. 

* Junior/Senior standing requires a student be enrolled in a Bachelor's degree. Students in Associates degree programs cannot be considered more than a sophomore, regardless of the number of credits they've completed.

Borrower Benefits: All lenders are NOT alike. Some will reduce up-front fees or not charge them. They may reduce your interest rate automatically when you begin repayment or they may reduce your interest rate for having loan repayments auto-debited. Your best bet is to compare lenders to get the best deal.

Cancellation: Your loan is canceled because of things like no monies being disbursed to the borrower; the lender’s check was never cashed; the loan was repaid within 120 days after being transferred to the account, etc.

Default: To default on your loan means your federal loan is 270 days or more past due.

Default Fees: Default fees are the late fees your lender (or guarantor) charge you when your loan is in default.

Deferment: Is postponing the repayment of your student loan for a period of time, usually because of unexpected economic hardship. You must apply for a deferment – it is not automatic. Contact your lender for specifics for your loan.

Delinquency: This is when you fail to make your monthly loan payments when they are due. Delinquency begins with the FIRST missed payment.

Disbursement: When your loan monies are release to the college for delivery to the borrower (student).

Forbearance: This is a temporary hold of your regularly scheduled repayment of your student loan, or being permitted to make smaller payments then what was originally scheduled on the loan agreement. You are usually still responsible for the entire amount of interest accrued during this time. This must be arranged with your lender – it is NOT automatic!

Grace Period: This is a specific time period between the date the student graduates (or drops below half-time enrollment status), and when they must begin repaying their student loans. Generally this is about six months from the date of graduation or when you drop below half-time. Check with your lender.

Lender Fees: May also be referred to as processing fees or underwriting fees. These are fees the lender charges to offset the cost of producing the loan.

Master Promissory Note (MPN): This is the legally binding document the student signs that makes them liable for repayment of the loan and states the terms of the loan, etc.

Origination Fee: The amount your lender charges for services performed handling the initial application and processing of the loan repayment.

Discounts: Some lenders will lower your principal balance if you make on-time payments. They may also give you a rate decrease for using automatic payments.

Repayment Fees: If you choose another plan besides the standard repayment plan, you may lower your monthly payments, but increase the total amount you pay over time.

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