NEED-BASED AND NON-NEED-BASED FEDERAL FINANCIAL AID

Federal Pell Grant

The Federal Pell Grant is a need-based federal student aid program designed to provide assistance to any eligible student to aid them in attending a postsecondary institution.  Unlike a loan, a Federal Pell Grant does not need to be repaid.  This grant is intended to provide the floor or foundation upon which other student aid is awarded.  The maximum scheduled award for the Federal Pell Grant for an eligible student is established by the federal government on an annual basis. The Professional Truck Driver Program is the only program that is eligible for the Federal Pell Grant.  This program is less than an academic year; therefore, the student’s scheduled award is prorated accordingly.  The maximum annual award for the 2011-2012 award years is $2,775.00.

Federal Direct Subsidized Loan

This need-based loan program was established to enable the student to secure long-term loans from the Department of Education to aid them in attending a postsecondary institution.  Repayment of this loan generally begins six months after the student ceases to be enrolled on at least a half-time basis.  The interest rate for this loan is a fixed rate of 3.4% for loans first disbursed on or after July l, 2011 and originated prior to July l, 2012.  No interest accrues on this loan during the time the student is enrolled at least half-time or during the six month grace period following the student’s last day of attendance.  At the conclusion of the grace period, the student enters repayment and interest begins to accrue.  The maximum loan eligibility is dependent on the length of the student’s program of study and is prorated accordingly.  The maximum loan eligibility for an eligible student enrolled in the Commercial Truck Driver Program is $1167.00.   The maximum loan eligibility for an eligible student enrolled in the Professional Truck Driver Program is $2333.00.

Federal Direct Unsubsidized Loan

This non-need-based loan program is designed to enable middle-income borrowers to obtain educational financing.  The same terms that apply to the Federal Direct Subsidized Loan will apply, except that the borrower will be responsible for interest that accrues on the loan from the date of the loan’s initial disbursement.  All Unsubsidized Direct Loans have a fixed interest rate of 6.8%.  Independent students and dependent students whose parents are unable to borrow under the Federal PLUS Program, may borrow up to $2,000.00 for the Commercial Truck Driver Program and up to $4,000.00 for the Professional Truck Driver Program.  A dependent student, whose parents have been approved under the Federal PLUS Program, may borrow a maximum of $1333.00.  If a student does not qualify for the Federal Direct Subsidized Loan, the student may borrow up to $3,167.00 for the Commercial Truck Driver Program and $6,333.00 for the Professional Truck Driver Program. 

Federal Direct PLUS Loans

Credit worthy parents of dependent students may borrow from the PLUS program each academic year an amount that is equal to the cost of attendance minus any other financial aid received.  Federal PLUS Loans are intended to provide additional funds for educational expenses.  The interest rate for this non-need based loan is a fixed rate of 7.9%.  Interest is charged on the loan from the date of the first disbursement.  The repayment period begins on the date the loan is fully disbursed, as there is no grace period.

PRIVATE AND INSTITUTIONAL FINANCIAL ASSISTANCE

Private Loan Program

Credit worthy students who have limited funding available to them through the Federal and State programs may apply for an alternative loan.  Students enrolled in the Commercial Truck Driver Program and the Professional Truck Driver Program may apply to finance the balance of their tuition and fees not covered by other Federal Title IV or State programs.  The loan amount requested must be at least $500.00 and cannot exceed the amount certified by the school.

Applications are available through the financial aid office of the campus you are attending.

AIT Institutional Loan Program

Credit worthy students who have limited funding available to them through the Federal, State, or Alternative Loan Programs to cover institutional charges may apply for an institutional loan.  The interest rate is 18% and the payment begins thirty to forty-five days after the completion of the resident portion of the program.

Applications are available through the financial aid office at the campus you are attending.

Other Aid Programs

A student attending AIT may also be eligible to receive funds to meet educational costs from:  Veterans Administration Benefits, Social Security, Bureau of Indian Affairs, Vocational Rehabilitation Workforce Investment Act, and other organizations or agencies providing scholarships and grants. 

The following is a supplemental list of financial aid resources:

AFL-CIO Guide to Union-sponsored Scholarships, Awards, & Student Financial Aid.  The Pamphlets Division, AFL-CIO, 815 16^th Street, NW, Washington, DC  20006.  Free to union members, $3 to others.

Applying for Financial Aid.  American College Testing Program, P.O. Box 168, Iowa City, IA 52243.  Free.

Chronicle Two-Year College Databook.  Chronicle Guidance Publications, Aurora Street, Moravia, NY  13118, $16.95 plus shipping and handling.

The College Board Guide to Going to College While Working:  Strategies for Success.  Gene Hawes.  College Board Publications, Box 886, New York, NY 10101, $9.95.

College Grants from Uncle Sam.  Octameron Associates, P.O. Box 3437, Alexandria, VA  22302.  $2.50 plus shipping and handling.

Directories of Financial Aids for Women.  Gail Ann Schlachter.  Reference Service Press, 1100 Industrial Road, Suite 9, San Carlos, CA  94070.

Higher Education Opportunities for Minorities and Women:  Annotated Selections.  Superintendent of Documents, US Government Printing Office, Washington, DC  20402, $4.25 prepaid.

New Horizons: The Education and Career Planning Guide for Adults.  William C. Haponski and Charles E. McCabe.  Peterson’s P.O. Box 2123, Princeton, NJ  08543, $8.95.

Paying for Your Education:  A Guide for Adult Learners.  College Board Publications, P.O. Box 886, New York, NY  10101-0886, $7.95.

TERMS AND CONDITIONS UNDER WHICH STUDENTS RECEIVE DIRECT LOANS XE "terms and conditions"

Citizenship

A student must be a citizen or eligible noncitizen to receive aid from the Federal Student Aid programs.  The general requirement for eligible noncitizens is that they be in the U.S. for other than a temporary purpose with the intention of becoming a citizen or lawful permanent resident, as evidenced by the United States Citizenship and Immigration Service (USCIS) in the Department of Homeland Security (DHS).  The eligible statuses are:  U.S. citizen; U.S. national (includes natives of American Samoa or Swain’s Island); U.S. permanent resident who has an I-151, I-551, or I-551C (Permanent Resident Card).

If a student does not fit into one of these categories, the financial aid office must receive an Arrival-Departure Record (I-94) form U.S. Citizenship and Immigration Services (USCIS) showing one of the following designations:  Refugee; Asylum Granted; Cuban-Haitian Entrant, Status Pending; Conditional Entrant (valid only if issued before April 1980); Parolee (Must be paroled into the United States for at least one year and you must be able to provide evidence from the USCIS that you are in the United States for other than a temporary purpose and that you intend to become a U.S. citizen or permanent resident.

If you only have a Notice of Approval to apply for permanent residency (I-171 or I-464), you are not eligible for federal student financial aid.

If you are in the United States on certain visas, including an F1 or F2 student visa, or a J1 or J2 exchange visitor visa, you are not eligible to receive federal student financial aid.

If you have a G series visa (pertaining to international organizations) you are not eligible for federal student financial aid.

Citizens of the Federated States of Micronesia, the republic of the Marshall Islands, and the Republic of Palau are eligible only for Federal Pell Grants, Federal Supplemental Educational Opportunity Grants or federal Work-Study.  AIT does not participate in Federal Supplemental Educational Opportunity Grants or Federal Work-Study.

Social Security Number

A student must have a valid Social Security Number (SSN) unless a student is from the Republic of the Marshall Islands, the Federated States of Micronesia, or the Republic of Palau.   Information about obtaining a SSN can be found on the following website:  www.ssa.gov, or by calling 1-800-772-1213.

Certifications

A student must certify that he or she will use the federal student aid only for educational purposes.  The student must also certify that he or she is not in default on a federal student loan and does not owe money on a federal student grant. 

Selective Service Registration

A male student, born after 1959, must comply with Selective Service registration.  If you are a male, aged 18 through 25, and have not registered, you can register at the time you apply for financial aid.  You can also register on-line at www.sss.gov.

Regular Student

A regular student must be enrolled or accepted for enrollment for the purpose of obtaining a diploma, be enrolled on at least a half-time basis (at least 18 quarter hours per year), and be enrolled in an eligible program (at least 12 credit hours and 10 weeks in length).

A regular student must have a high school diploma, a GED or recognized equivalent, or have the ability to benefit from the training provided.

In order to demonstrate the Ability to Benefit, a student must take the U.S. Department of Education approve Wonderlic Basic Skills Test, consisting of verbal and quantitative evaluations.  Minimum passing scores are: Verbal 200 and Quantitative 210.  The Wonderlic evaluation is administered by independent proctors certified by Wonderlic.

PROCEDURE FOR APPLYING FOR FINANCIAL ASSISTANCE 

Federal Financial Assistance

To be considered for federal student aid, a student must complete the Free Application for Federal Student Aid (FAF­SA).  The FAFSA collects financial and other information used to calculate the expected family contribution (EFC) and to determine a student’s eligibility through computer matches with other agencies.

The FAFSA is the only form students must fill out to apply for Title IV aid. The school may require additional information if the student is selected for verification or to resolve any conflicting information. The school may also require additional information for other purposes, such as packaging state, private or institutional aid. If the school collects additional information that affects Title IV eligibility, it must take the information into account when awarding Title IV aid.  The financial aid administrator at the campus location will help the student apply through FAA Access to CPS online.

The CPS uses the application data to calculate the EFC and to match against several databases: those of NSLDS, the Department of Justice, the Social Security Administration, and the Department of Veterans Affairs; the Department of Homeland Security’s database of noncitizens and the Selective Service System registration database.

After processing is complete, the CPS produces output documents or re­cords that show the information the student originally provided, the EFC, the results of the eligibility matches, and information about any inconsistencies identified through the CPS edits.   The school and/or the student receive the output document which allows the school to begin the packaging process.

Private Loan Program

Students may contact the financial aid office at the campus they are attending to obtain additional information and application forms, or they may contact a lender of choice to apply for a private educational loan.

AIT Institutional Loan Program

Students who have limited funding available through the Federal, State, or Alternative Loan Programs to cover tuition and fees may apply for an institutional loan.  For further information, they may contact the financial aid office at the campus they are attending.

Other Aid Programs

VA Educational Benefits (Arizona Campus Only)

Students may contact the financial aid office at the Arizona Campus to apply for VA benefits.

To apply for other educational assistance benefits through Social Security, Bureau of Indian Affairs, Vocational Rehabilitation, WIA or other organizations providing scholarships or grants, the student must contact the specific organization for further details and application procedures.

CRITERIA FOR SELECTION OF RECIPIENTS

Federal Assistance Programs

Please refer to the sections titled “Packaging Aid” and “Need-based and Non-Need-Based Federal Financial Aid”.

Private Loan Program

The student must be creditworthy and have an outstanding balance of $500 or more on their institutional charges that is not covered by other Federal Title IV or State Programs.  Students who pursue a lender of choice are required to qualify according to the criteria of that lender.

AIT Institutional Loan Program

The student must be creditworthy and have an outstanding balance on their institutional charges that cannot be awarded through other Federal Title IV, State, or Alternative Loan Programs.

Other Aid Programs

For all other aid programs, the student must meet the selection criteria of that specific agency or organization and award amounts will be determined by the agency or organization.

AWARDING OF STUDENT FINANCIAL ASSISTANCE

Federal Assistance Programs

Independent Students

Under federal regulations, a student may be classified as dependent or independent for financial aid purposes.  Independent students must meet the following criteria:

·         Born before January 1, 1988

·         Married

·         Working on a master’s or doctorate program in 2011-2012

·         Active duty in the U.S. Armed Forces/a veteran

·         Has children he/she supports

·         Has dependents other than a spouse or children that he/she supports

·         Parents deceased/ward of the court/in foster care

·         Emancipated minor/in legal guardianship

·         Unaccompanied homeless youth as determined by Homeless Liaison or HUD

·         At risk of becoming homeless

A student that does not meet any of the above criteria is considered dependent.  The FAFSA requires a dependent student applying for Title IV aid to provide personal and financial information about him or herself, as well as that of a parent. 

Determining Financial Need

Need-based grants and loans are based on the family’s demonstrated financial need for assistance.  The student’s financial need is the Cost of Attendance minus the Expected Family Contribution (EFC).

The cost of attendance is the cornerstone of establishing a student’s financial need, as it sets a limit on the total aid that a student may receive for purposes of the grant programs and Stafford/PLUS loans, and is one of the basic compo­nents of the Pell Grant calculation.  The cost of attendance for a student is an estimate of that student’s educational expenses for the period of enrollment. 

A student’s cost of attendance at AIT generally is the sum of the tuition and fees normally assessed for a student carrying the same academic workload, an allowance

for books, supplies, transportation, and miscella­neous personal expenses, and an allowance for room and board.  For students receiving loans, the fees required to receive them (for example, the loan fee for a Direct Loan), and for a student with dependents, an allowance for costs expected to be incurred for dependent care.  The cost of attendance used to package Stafford/PLUS loans covers the student’s actual period of enrollment.  The cost of attendance to package Pell Grants is always based on the costs for a full-time student for a full academic year.

The Expected Family Contribution (EFC) is a measure of how much the student and his or her family can be expected to contribute to the cost of the student’s education for the academic year. The EFC is calculated according to a formula specified in the law.  Student’s seeking financial assistance is encouraged to contribute toward their educational expenses through savings and/or employment while attending school.

Packaging Aid

The process of awarding aid without exceeding the student’s financial need is traditionally called packaging.

Once the school has received the student’s FAFSA information (including EFC) and calculated the student’s aid eligibility, we begin to package the student’s aid. The general rule in packaging is that the student’s total financial aid and other Estimated Financial Assistance (EFA) must not exceed the student’s financial need (Need = Cost of attendance minus the EFC).  AIT strives to award the best combination of aid to meet the financial need of the students they serve.

Pell Grants are considered to be the first source of aid to the student, and packaging FSA funds begins with Pell eligibility.  We then determine if the student has any outside sources to be considered when meeting the remaining need.  If there is need remaining, we first determine the student’s need for a Federal Direct Subsidized Loan.  This is done prior to originating a Federal Direct Unsubsidized Loan.  For a dependent student, we may originate a Parent PLUS loan and disburse Parent PLUS loan funds without determining the student’s Pell Grant and subsi­dized Stafford Loan eligibility.

Private Loan Program

If there are outstanding institutional charges remaining after all other aid is awarded, the Alternative Loan Program may be available to creditworthy students who have an outstanding balance of $500 or more.

AIT Institutional Loan Program

Creditworthy students that have a balance of less than $500 in outstanding institutional charges after all other aid has been awarded may be considered for an AIT Institutional Loan for that amount.

AIT reserves the right to revise all financial aid awards when circumstances change from those apparent at the time the original packaging was completed.

RIGHTS AND RESPONSIBILITIES FOR FEDERAL DIRECT LOANS XE "rights and responsibilities"

Federal Direct Loan Program

You have the right to the following:

·         Receive a copy of your promissory note from your lender once the loan is made.

·         Written information on loan obligations and information on rights and responsibilities as a borrower.

·         An interest free grace period before the repayment of a Federal Direct Subsidized loan begins.  A grace period for a Federal Direct Unsubsidized Loan (interest will accrue on this loan.)  PLUS loans do not have a grace period.

·         Prepay your loans in whole or part at any time without penalty.

·         Receive a payment schedule from your lender, with detailed information about interest rates, fees, the balance you owe, and repayment options available.

·         Defer payment of your loan for certain defined periods after the grace period has expired, if you qualify.

·         Request a forbearance from your lender if you are willing, but not able, to make payments. 

It is your responsibility to do the following:

·         Attend a loan counseling exit interview before you leave school.

·         Notify your lender or the holder of your loan if you: change your address and/or telephone number, transfer to another school, graduate, withdraw from school, drop below half-time status, change your name, or fail to enroll in school for the intended loan period.

·         Repay your loan even if you do not complete your education program, if you are unable to obtain employment, or are dissatisfied with the education received.

·         Repay at least the minimum payment each month, unless you have received a deferment or have made special arrangements with the lender.

·          Notify your lender of anything that might change your eligibility for an existing deferment.

If you fail to make timely payments on your loan:

·         Your school records may be placed on hold.

·         You may lose your eligibility to receive any additional federal financial aid.

·         Collection efforts will be made to obtain past due amounts.

·         The entire unpaid balance of your loan, plus accrued interest, may become immediately due and payable.

·         Your loan information will be reported to the credit bureau indicating that you are delinquent (late) or in default (non-payment).  This action may seriously affect your credit rating and your future eligibility to borrow.

·         Your federal income tax refund may be confiscated and applied to your loan balance.

·         Your employer may be required to garnish your wages; the garnished amount will be applied to your loan balance.

·         Collection costs, including attorney’s fees, may be charged to you.

Consider the following important information before making your decision to borrow Federal Funds for your education:

§         If you receive a Federal Loan, it may reduce your eligibility for other types of financial aid.

§         Interest will accrue on an Unsubsidized Direct Loan from the time the loan is disbursed.  You have the option of paying this interest while you attend school, during your grace period, and during any forbearance periods in the future.  Paying interest as it accrues will result in a lower total repayment cost over the life of the loan.

§         If you choose not to pay interest on an Unsubsidized Direct Loan, the interest will be added to the total amount of the loan.  This is referred to as Capitalization.

§         The maximum amount that you are eligible to borrow may be more than is required to cover the cost of your education.  Consider the amount of debt you need to incur to complete your program.

§         If you chose to withdraw from your program, you must contact the school immediately.  One of the most common reasons a loan goes into default is because the school does not have current information on a borrower.

§         Loans must be repaid even if you do not complete the program, are dissatisfied with your educational experience, fail to find a job in your chosen field, or do not complete your program in the time usually allotted for program completion.

§         Students who become delinquent on their loan repayment may damage their credit rating for other types of loans in the future.

For additional information regarding these items, please refer to:

 “Funding Education Beyond High School – The Guide to Federal Student Aid 2010-11” at http://studentaid.ed.gov/students/publications/student_guide/index.html

 “The Entrance Counseling Guide for Direct Loan Borrowers” at http://www.direct.ed.gov/pubs/entrcounselguide.pdf

“The Exit Counseling Guide for Direct Loan Borrowers” at http://www2.ed.gov/offices/OSFAP/DirectLoan/pubs/exitcounselguide.pdf

You can also visit the Direct Loan website at www.direct.ed.gov

RIGHTS AND RESPONSIBILITIES FOR PRIVATE AND INSTITUTIONAL LOANS

Private Loan Program

As a borrower of a private loan, you have the following rights:

·         A description on the initial amount borrowed, the total interest that will accrue, and the total cost over the established repayment schedule.

·         Disclosure of the annual percentage rate.

·         The repayment schedule and amount of monthly payments.

·         The right to cancel the loan within a certain time frame.

·         The application of late charges, collection fees, and non-sufficient fund fees.

·         The consequences of default.

·         The reassignment of the loan.

As a borrower of a private loan, you have the following responsibilities:

·         To repay your loan as scheduled.

·         To notify your lender if you move or obtain a new phone contact.

AIT Institutional Loan Program

As a borrower of an institutional loan, you have the following rights:

·         A description on the initial amount borrowed, the total interest that will accrue, and the total cost over the established repayment schedule.

·         Disclosure of the annual percentage rate.

·         The repayment schedule and amount of monthly payments.

·         The right to cancel the loan within a certain time frame.

·         The application of late charges, collection fees, and non-sufficient fund fees.

·         The consequences of default.

·         The reassignment of the loan.

As a borrower of an institutional loan, you have the following responsibilities:

·         To repay your loan as scheduled.

·         To notify your lender if you move or obtain a new phone contact.

SATISFACTORY ACADEMIC PROGRESS

Each student will be evaluated at two intervals throughout the program for the following:

Pace

Progression that ensures completion of the program in the maximum time frame

PACE is defined as credit hours completed/credit hours attempted.

GPA

Each student must maintain a minimum GPA at each interval.

Maximum Time Frame

For an undergraduate program measured in credit hours, a period that is no longer than 150 percent of the published length of the educational program, as measured in credit hours.

The table below identifies the qualitative (GPA), quantitative (PACE) and maximum time frame a student must achieve at each payment period.  A payment period is the time at which a student completes ½ the credit hours and ½ of the weeks.  The following payment periods represent a student progressing at the “normal time rate.”

Professional Truck Driver:   1^st  payment period = Week  01 to Week 15

                                              2^nd payment period = Week 16 to Week 24

Commercial Truck Driver:  1^st  payment period  = Week 01 to Week 05

                                              2^nd payment period = Week  06 to Week10

Factors that may affect a student’s GPA and PACE are:

Incompletes

 An incomplete cannot be given as a final grade.  At the end of the program a student may, with the Director’s approval, be granted an extension of no more than ten days of class in order to complete all of the required course work, assignments, and tests.   If a student does not complete the required course work, assignments, and tests within the extension period, he/she will receive a grade of “F” or “zero” which will be averaged in with the other grades to determine GPA.  PACE will not be affected, since the student is not attempting credits.

Withdrawals

Due to the nature of the curriculum, a student is not able to “withdraw” from a portion of the program.  The student must “withdraw” from the entire program, thus stopping satisfactory progress.

Repetitions

 If a student is required to repeat a module of study the student will be considered to have attempted double the credits, and the grade earned in the repeat module will prevail.

Transfer of Credit

An applicant with documented previous training and/or job experience may challenge any part of the program and receive credit by successfully passing a challenge exam.  If a portion of the program is successfully challenged, credit will be awarded on a quarter credit basis appropriate for that portion of the program.  (Credit awarded will be both educational and financial.)

Academic Probation

In the event that a student does not achieve the established criteria for determining satisfactory academic progress, the student will be allowed to present justification of extenuating circumstances as to why he or she should be allowed to continue training.  The Director of Education has the authority to allow the student up to a four week probationary period to achieve the established criteria.  The student will be considered making satisfactory academic progress during any probationary period.  If satisfactory academic progress is not achieved at the end of the probationary period, the student will be removed from the list of eligible Financial Aid recipients and may be terminated from the program.

Financial Aid Warning

If it has been determined that a student has failed to make SAP and/or PACE at the end of the first payment period, he/she will receive a financial aid warning.    This warning will be issued in writing by the Corporate Director of Student Records.  The student will have one payment period in which to be removed from financial aid warning in order to maintain title IV eligibility.  A student who is not making SAP at that time will no longer be eligible for title IV.

Financial aid warning means a status assigned to a student who fails to make satisfactory academic progress at an institution that evaluates academic progress at the end of each payment period.  Students who are terminated from financial aid may submit an appeal for reinstatement of eligibility when they have mitigating circumstances beyond their control.  Such circumstances include the student’s injury or illness, death of a relative, or other special circumstances.

FINANCIAL AID DISBURSEMENTS

How Funds are Disbursed

There are two ways to disburse FSA funds: by crediting the student’s account for allowable charges or by paying the student or parent directly.  Allowable charges include current charges for tuition and fees.

AIT first credits FSA funds to the student’s account, and then disburses any credit balance to the student or parent.

When Funds are Disbursed

A disbursement occurs when the school credits a student’s account or pays a student or parent directly with Federal Student Aid funds received from the Department of Education.

Prior to disbursing Federal Student Aid funds, the school confirms that he or she is an eligible student and is making satisfactory academic progress.

Disbursements to eligible students are made at the beginning of each payment period and no later than 3 business days after receiving funds from the Department of Education.  An exception to this is a 30 day delayed disbursement of Federal Direct Stafford Loan Program funds for students who are first-year, first- time borrowers.  The student is provided with a Cost Worksheet indicating the estimated dates of disbursements.

If Federal Student Aid disbursements to the student’s account at the school creates a credit balance, the credit balance is disbursed directly to the student or parent as soon as possible, but no later than 14 days after the date the balance occurred on the student’s account, if the balance occurred after the first day of class of a payment period, or on the first day of classes of the payment period if the credit bal­ance occurred on or before the first day of class of that pay­ment period.

The law requires that any excess PLUS Loan funds be returned to the parent. Therefore, if PLUS Loan funds create a credit balance the credit balance is paid to the parent. However, the parent may authorize the school (in writing) to transfer the proceeds of a PLUS Loan directly to the student for whom the loan is made.

TERMS OF FEDERAL DIRECT LOANS

*Need Based:  The loan amount is based on the difference between the student’s cost of attendance and the expected family contribution.

**Cost Based:  The loan amount is based on the student’s cost of attendance which includes tuition, fees and living expenses while attending school.  The school estimates the cost of attendance with guidelines established by federal regulation.  A school will award a maximum need-based Federal Direct Subsidized Loan before awarding a Federal Direct Unsubsidized Loan.

***Cost of education minus any other aid

Loan Fee:  A fee paid to the government to help reduce the costs of the loan program.

Interest Rebate:  An incentive offered to borrows who make the first 12 payments of their loan on time.

SAMPLE REPAYMENT SCHEDULE – FEDERAL DIRECT LOANS

REPAYMENT PLANS AVAILABLE FOR FEDERAL DIRECT LOANS  XE "repayment plans"

Repayment Plans

The Direct Loan Program offers loan repayment plans designed to meet the needs of almost every borrower. Direct Loans are funded by the U.S. Department of Education through AIT and are managed by a loan servicer, under the supervision of the Department. The Direct Loan Program allows you to choose your repayment plan and to switch your plan if your needs change.

To find out more about repayment options before receiving a Direct Loan, borrowers may contact their school's financial aid office or the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243) or go to www.direct.ed.gov.

Parent Direct PLUS Loan borrowers may only choose from the standard, extended, or graduated options, but student Direct PLUS Loan borrowers may also choose the income contingent repayment plan or the income-based repayment plan.

Standard Repayment

With the standard plan, you'll pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50, and you'll have up to 10 years to repay your loans.

The standard plan is good for you if you can handle higher monthly payments because you'll repay your loans more quickly. Your monthly payment under the standard plan may be higher than it would be under the other plans because your loans will be repaid in the shortest time. For the same reason—the 10-year limit on repayment—you may pay the least interest.

Extended Repayment

To be eligible for the extended plan, you must have more than $30,000 in Direct Loan debt and you must not have an outstanding balance on a Direct Loan as of October 7, 1998. Under the extended plan you have 25 years for repayment and two payment options: fixed or graduated. Fixed payments are the same amount each month, as with the standard plan, while graduated payments start low and increase every two years, as with the graduated plan below.

This is a good plan if you will need to make smaller monthly payments. Because the repayment period will be 25 years, your monthly payments will be less than with the standard plan. However, you may pay more in interest because you're taking longer to repay the loans. Remember that the longer your loans are in repayment, the more interest you will pay.

Graduated Repayment

With this plan your payments start out low and increase every two years. The length of your repayment period will be up to ten years. If you expect your income to increase steadily over time, this plan may be right for you. Your monthly payment will never be less than the amount of interest that accrues between payments. Although your monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment.

Income Contingent Repayment (not available for parent PLUS loans)

This plan gives you the flexibility to meet your Direct Loan obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of:

• the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or
• 20% of your monthly discretionary income*.

If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized.

The maximum repayment period is 25 years. If you haven't fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.

Income-based Repayment

Under this plan the required monthly payment will be based on your income during any period when you have a partial financial hardship. Your monthly payment may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If you meet certain requirements over a specified period of time, you may qualify for cancellation of any outstanding balance of your loans.

*Monthly discretionary income equals your AGI minus the poverty level for your state   of residence and family size, divided by 12.  For the current poverty level, see the Poverty Guidelines Chart, which is issued annually by the U.S. Department of Health and Human Services.

Consider the additional loan information in addition to the exit counseling you have already received:

§         There are four different repayments options available to you:  standard, graduated, income-sensitive, and extended.  Interest amounts and total payments required will vary based on the repayment option chosen.

§         The Department of Education offers several programs available to assist a borrower who may experience financial hardship during loan repayment.

§         As a borrower, you have the option to prepay your loan at any time, to request a shorter repayment term, and to request changes to the repayment schedule itself.

§          It is important to remain current on your loan payments.  Delinquent and defaulted Federal Loans can seriously affect your credit and likelihood of obtaining additional loans in the future.

§         Consolidation enables a borrower to combine eligible education loans into one new loan with one monthly payment and a fixed interest rate.  Consolidation benefits differ and a borrower may lose certain rights by selecting a consolidation option.

§         There are several tax benefits that may be available to borrowers.  Tax option information is provided in the exit interview packet.

§         You may track your Federal loans through the national Student Loan Data System (NSLDS) at:  www.NSLDS.ed.gov

§         Loans must be repaid even if you do not complete the program, are dissatisfied with your educational experience, fail to find a job in your chosen field, or do not complete your program in the time usually allotted for program completion.

§         Students who become delinquent on their loan repayment may damage their credit rating for other types of loans in the future.

For additional information regarding these items, please refer to:

“The Exit Counseling Guide for Direct Loan Borrowers” at http://www2.ed.gov/offices/OSFAP/DirectLoan/pubs/exitcounselguide.pdf

You can also visit the Direct Loan website at www.direct.ed.gov

Deferments

A deferment is a postponement of payment on a loan, during which interest does not accrue if the loan is subsidized.

You may qualify for a deferment while you are:

• Enrolled at least half time in an eligible postsecondary school or studying full time in a graduate fellowship program or an approved disability rehabilitation program.
• Unemployed or meet our rules for economic hardship (limited to 3 years).

You may also be eligible for a deferment based on qualifying active duty service in the U.S. Armed Forces or National Guard. Refer to the MPN for your loan or contact the Direct Loan Servicing Center for more information about specific qualifications for deferment based on military service.

In most cases, you need to submit a deferment request to your loan servicer along with documentation of your eligibility for the deferment.  If you've gone back to school and your loan servicer receives enrollment information that shows you're enrolled at least half time, it will automatically put your loans into deferment and notify you. You have the option of cancelling the deferment and continuing to make payments on your loan.

If you are in default on your loan, you are not eligible for a deferment or forbearance.

Forbearances

If you can't make your scheduled loan payments, but don't qualify for a deferment, you may be qualify for a forbearance. Forbearance allows you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. Some common reasons for getting forbearance are illness, financial hardship or serving in a medical or dental internship or residency. See your copy of the Borrower's Rights and Responsibilities Statement for more examples. You can get more information by contacting your loan servicer.

Under certain circumstances, you can automatically qualify for forbearance, for instance, while processing a deferment, forbearance, cancellation, and change in repayment plan or consolidation, or if you're involved in a military mobilization or a local or national emergency.

Necessity of Loan Repayment

It is very important that you make your loan payments on time. If you are having trouble making your monthly payment, you should immediately contact your loan holder or loan servicer.  You’ve made a commitment to yourself and your future. Be a responsible borrower—you don’t want to default on your student loan. Default is the failure to repay your loan according to the terms of the promissory niter

Loan default has serious consequences:

·         Your entire loan balance (principal and interest) will be due in full immediately.

·         Your college records may be placed on hold.

·         You’ll lose eligibility for loan deferment.

·         You won’t be eligible for additional federal student aid.

·         Your account may be turned over to a collection agency and you’ll have to pay additional charges, late fees and collection costs, all of which become part of your debt.

·         Your credit rating will be damaged for several years because defaulted loans are reported to national credit bureaus.

You’ll have difficulty qualifying for credit cards, a car loan, a mortgage, or renting an apartment (credit checks are required to rent an apartment).  Your federal and state income tax refunds can be withheld and applied to student loan debt. This is called a tax offset.   You may have a portion of your wages garnished (withheld).  You may not be able to obtain a professional license or get hired by an employer that performs credit checks.  

Remember... Don’t Default!

SAMPLE REPAYMENT SCHEDULE – PRIVATE LOANS

SAMPLE REPAYMENT SCHEDULE – INSTITUTIONAL LOANS

REQUIRED EXIT COUNSELING

Student loans, unlike grants and work-study, are borrowed money that must be repaid, with interest, just like car loans and home mortgages. You cannot have these loans canceled because you didn’t like the education you received, didn’t get a job in your field of study or because you’re having financial difficulty. Loans are legal obligations that you’ll have to repay.

For additional information regarding repayment of your student loans, go to: http://www.direct.ed.gov/pubs/exitcounselguide.pdf  to access the Exit Counseling Guide.

EXPLANATION OF THE EXIT COUNSELING PROCESS

Each student borrower must be provided with exit counseling under the Federal Direct Loan Program before the student borrower ceases at least half-time study at the school.  The counseling will provide information on:

·         The average anticipated monthly repayment amount.

·         Repayment plan options and the option to prepay or pay on a shorter schedule.

·         Debt Management Strategies.

·         The purpose and use of the Master Promissory Note.

·         The seriousness and importance of student’s repayment obligation.

·         Terms and conditions for forgiveness or cancellation.

·         Copy of information provided by the U.S. Department of Education.

·         Terms and conditions for deferment or forbearance.

·         Consequences of default.

·         Options and consequences of loan consolidation.

·         Tax benefits available to borrowers.

·         The obligation of the borrower to repay the full amount of the loan regardless of whether the borrower completes program or completes within regular time for completion, is unable to obtain unemployment upon completion, or is otherwise dissatisfied with or did not receive the educational or other services the borrower purchased from the school.

·         Availability of the Student Loan Ombudsman’s office.

·         Information about NSLDS.  The U.S. Department of Education is required to provide a disclosure form for students and prospective students about NSLDS.

·         insert exit counseling list from consumer info