Loans are a financial aid resource and most students at some point in their college careers need to borrow loan funds. Loans are available through many sources including the federal government, the state, the institution and private lenders.
Students that borrow should research the terms and agreement of any loan, including Federal Stafford loans, before borrowing. Borrowing requires a commitment/obligation to repay and therefore it is important to understand your responsibilities and rights as a student loan borrower.
The Federal Government is the largest education loan lender. The US Department of Education offers three different types of Federal Direct Loans depending upon your student type: Subsidized, Unsubsidized and PLUS (Graduate and Parent). Students must be enrolled at least half-time to be eligible for federal student loans. Repayment of student loans begins six months after graduation or six months after dropping below half-time status. Parents have the option of entering repayment immediately after the loan is fully disbursed or deferring repayment until the student graduates or drops below a half-time status.
There are two types of Federal Direct Stafford Loans:
Federal Direct Subsidized Stafford Loan
This is a need-based loan for which the interest is paid by the government while the student is in school at least half-time. Interest will begin to accumulate at the start of the student’s 6 month grace period (the period of time before repayment, which occurs after the student is no longer in school at least half time). Students who are new borrowers beginning July 1, 2013, may receive the Federal Direct Subsidized Stafford Loan for a timeframe equivalent to 150% of the length of the student’s degree or certificate, provided that all other eligibility criteria are met. In addition, any previously-borrowed subsidized loan will begin to accrue interest at the time that the student reaches the 150% timeframe. Click here for more information about this limit.
Federal Direct Unsubsidized Stafford Loan
There is no financial need requirement to be eligible for an Unsubsidized Loan. However, total financial aid, which includes the Unsubsidized Loan, cannot exceed the cost of education. Unlike the Subsidized Stafford Loan, interest accumulates while the student is attending school and can be paid monthly or capitalized (added to the total loan balance) until the student leaves school.
Federal Direct PLUS (Parent and Graduate)
Parents may borrow funds to cover educational costs for their dependent students. There is no financial need required to be eligible; however, total financial aid cannot exceed cost of education. The applicant’s credit history will be evaluated in determining loan eligibility. The maximum award amount is the student's cost of attendance less other financial aid, subject to credit approval. Application for the PLUS includes the Free Application for Federal Student Aid (FAFSA) and the Federal Direct Parent PLUS application and Master Promissory Note (MPN). The application and MPN may be completed at studentloans.gov.
Ohio State Loan Program
The Nurse Education Assistance Loan Program (NEALP) is a state program for nursing students who, upon completion of their education, plan to practice nursing in the state of Ohio. Students must be admitted to the nursing program to be considered. The loan is based on financial need. After graduation, the student may be eligible for loan forgiveness at the rate of 20 percent per year and a maximum loan cancellation of 100 percent. For more information, refer to the NEALP website listed below or call the Ohio Board of Regents State Grants & Scholarships Office at 1-888-833-1133. The award amount is up to $1,500 per year and may be renewed for a maximum of four years. Students must be enrolled at least half-time. Students apply directly from the state of Ohio. The NEALP application forms are available on the Ohio Board of Regents website. Applications are available beginning January 1 and must be submitted by July 15 preceding the fall semester. Students must complete the Free Application for Federal Student Aid before submitting the NEALP application.
It is also important to plan for your future now. Only borrow what you need. Over borrowing has become an epidemic in the United States. Responsible borrow demands responsible decisions. The following pages provide important information on loan programs, the necessary paperwork and repayment.
Additionally, the FinAid.org website is a useful resource for students and parents regarding borrow for college.