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Federal Loan Requirements
Only citizens and permanent residents of the United States who are in good academic standing and enrolled at least half time in degree programs are eligible to apply for federal loan funds. The Graduate School defines half time registration as enrollment in two billable units per quarter. A student must maintain at least half-time registration during the entire period of time covered by a federal loan.
The Free Application for Federal Student Aid (FAFSA) must be completed annually to determine a student's eligibility for federal loans. The form may be completed and submitted at www.fafsa.ed.gov. Students who want their FAFSA data transmitted electronically to Northwestern University should enter Department of Education code 001739 online. The federal government may require verification of certain items reported on your FAFSA before certification or disbursement of federal loan funds. Students selected for verification will be notified.
Students who receive any financial aid (such as assistantships or traineeships), must, by law, inform their financial aid advisors. If necessary, appropriate decreases will be made to any loan funds already approved or disbursed. Receipt of these additional funds may result in students having to repay loan funds already received.
Online Entrance counseling is required by federal regulation for first-time borrowers at NU of Federal Stafford, Perkins, and GradPLUS Loans. Students who have received their loan awards may check their To Do List on CAESAR for further instructions. Separate online entrance counseling sessions must be completed for each loan type before the loans can be processed.
Exit counseling is also required by federal regulation for students who have borrowed any federal loans during their enrollment at Northwestern University. Students will be notified of the need for an exit interview upon graduation or when they drop below half-time enrollment. Group exit sessions are conducted in the spring. Students who cannot attend one of the group sessions, may request an individual interview with a Student Financial Services Counselor. Exit counseling materials may also be mailed to the student for completion. Failure to complete the exit process may lead to default status.
All federal loans have fixed interest rates (eff. 7/01/06) and are cancellable in the case of death or permanent disability and under other specific circumstances. They carry no penalty for prepayment and offer a number of deferments.
Subsidized Federal Stafford Loan Program
The subsidized Federal Stafford Loan is need-based with a fixed interest rate of 6.8% (eff. 7/01/06). Need is defined as a student's Cost of Attendance (2009-2010) less any university or outside support (including fellowships, research/teaching assistantships, and scholarships), minus the Expected Family Contribution (EFC). The EFC is determined by a federal formula using the information provided on the student's FAFSA.
The maximum amount that a graduate student may borrow in subsidized Stafford funds is $8,500 per academic year. Three quarters constitutes an academic year. The total amount of subsidized Federal Stafford Loans, borrowed at both the undergraduate and graduate levels, may not exceed $65,500. This maximum also includes any amount previously borrowed under the William D. Ford Direct Loan Program.
A 1% default fee and an origination fee of up to 1% of the loan amount may be deducted from each loan disbursement, depending upon a student's lender and loan guarantor. The government pays the interest that accrues on subsidized Federal Stafford Loans while the student is in school, during the grace period, and during approved deferment periods.
Repayment begins six months after a student is no longer enrolled at least half-time. The lender will provide repayment schedules and the amount of the loan debt before the end of the six month grace period. The standard repayment term is ten years. However, a student may be eligible for graduated, income sensitive, or extended repayment terms.
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Unsubsidized Federal Stafford Loan Program
An Unsubsidized Federal Stafford Loan is not based on financial need and is available to students who:
- have borrowed the maximum in subsidized Federal Stafford Loan funds
- are eligible for only a partial subsidized Federal Stafford Loan
- are not eligible for any subsidized Federal Stafford Loan funds
The maximum amount of both subsidized and unsubsidized Stafford loan funds that a student may borrow is $20,500 (eff. 7/01/07) per academic year. Three quarters constitutes an academic year. A student who is awarded the $8500 maximum in subsidized funds, may borrow a maximum of $12,000 in unsubsidized funds. The total amount of Federal Stafford Loans (subsidized and unsubsidized) which may be borrowed at both the undergraduate and graduate levels may not exceed $138,500. These aggregates also include any amounts borrowed under the William D. Ford Federal Direct Loan Program (Direct Loans).
A 1% default fee and an origination fee of up to 1% of the loan amount may be deducted from each loan disbursement, depending upon a student's lender and loan guarantor. The unsubsidized Stafford Loan has a fixed interest rate of 6.8% (eff. 7/01/06). A student who borrows unsubsidized Stafford loans is responsible for payment of the interest that accrues from the date of funds disbursement. Payment of accrued interest is optional while the student is in school. Any unpaid interest will be caplitalized (added to the principal balance) at the end of the six month grace period when repayment begins.
Repayment of a Stafford Loan (principle and interest) begins six months after a student is no longer enrolled at least half-time. The lender will provide repayment schedules and the amount of the loan debt before the end of the six month grace period. The standard repayment term is ten years. However, a student may be eligible for graduated, income sensitive, or extended repayment terms.
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Federal Carl Perkins Loan Program
Northwestern, along with nearly every other university in the country, is faced with a significant decline in Perkins funding. As such, there is no guarantee that students will receive Perkins funds.
The Federal Perkins Loan is need-based with a 5% fixed-interest rate. Need is defined as a student's Cost of Attendance (2009-2010) less any university or outside support (including fellowships, research/teaching assistantships, and scholarships), minus the Expected Family Contribution (EFC). The EFC is determined by a federal formula using the information provided on the student's FAFSA.
The Perkins Loan may be available to students who have borrowed the maximum in Federal Subsidized Stafford Loan funds. Because Perkins funds are limited, students are usually awarded a maximum of $1,500 per quarter. As the funds are awarded on a first come, first served basis, it is imperative that eligible students submit all required materials as early as possible.
The total amount of Federal Perkins Loan funds that students may borrow is $60,000. The Federal Government pays the interest while the student is registered at least half-time and during the nine month grace period which begins when a student drops below half-time enrollment. The NU Student Loan Office provides repayment amounts and schedules when a student leaves the University. The standard repayment term is ten years.
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Federal PLUS Loan Program for Graduate/Professional Students
The Federal GradPLUS Loan is not based on financial need and is available to students who have borrowed the maximum $20,500 (eff. 7/01/07) under the Federal Stafford Loan Program. A student's eligibility is determined by subtracting any aid to be received for the loan period (including other loan funds) from the student's Cost of Attendance (2009-2010). The Federal Government charges a 1% default fee and an origination fee of 3% of the loan amount. These fees are deducted from each loan disbursement. (The default fee is usually paid on the student's behalf by the lender and guarantor.)
The GradPLUS Loan has a fixed interest rate of 8.5%. The student is responsible for payment of the interest that accrues from the date of funds disbursement. Payment of accrued interest is optional while the student is in school. Unpaid interest will be capitalized (added to the loan principal) when repayment begins within 60 days after the final loan disbursement. GradPLUS loans will be placed into in-school deferment for borrowers who are certified by their school to be enrolled at least half-time. No payments are required during in-school deferment. Although there is no grace period before repayment begins, students may request (from their loanholder) a six month deferment to coordinate with their Stafford Loan grace period.
The standard repayment term is ten years. Borrowers with high amounts of student loan debt may be eligible for up to a 25-year repayment term and the choice of standard or graduated payments. Extended repayment results in a higher total loan cost than with standard repayment.
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Last updated: Aug 25 2009 12:52PM
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