Loans


  • The Federal Direct Stafford Subsidized Loan
    Source:
     Funds for this loan program are made available through the United States Department of Education.
    Criteria: This program is open to all qualifying undergraduate students who are US citizens (or permanent residents) that are enrolled in a degree program and qualify for federal aid.
    Award: Subsidized loans are need-based with interest subsidies (paid on behalf of the student by the Department of Education) while the student is enrolled at least 1/2 time. For information about our Direct Loan awarding process, and definitions of commonly used loan terms, please refer to our Federal Direct Loan Information Sheet . For details on maximum award allowances, click HERE.

    The Federal Direct Stafford Unsubsidized Loan
    Source:
     Funds for this loan program are made available through the United States Department of Education.
    Criteria: This program is open to all undergraduate and graduate students who are US citizens (or permanent residents) that are enrolled in a degree program and qualify for federal aid.
    Award: Unsubsidized loans are not based on need, and interest begins to accrue as soon as the loan is disbursed. For information about our Direct Loan awarding process, and definitions of commonly used loan terms, please refer to our Federal Direct Loan Information Sheet . For details on maximum award allowances, click HERE.

    The Federal Direct Parent PLUS Loan
    Source:
     Funds for this loan program are made available through the United States Department of Education.
    Criteria: Parent applying must be U.S. Citizen or permanent resident, receive credit approval, and their student must qualify to receive federal aid and be enrolled in a degree program.
    Award: Parents may borrow up to the cost of attendance for a full time student less any other financial assistance received. This loan is and its repayment is the responsibility of the parent. The parent may choose to go into repayment while their student is still enrolled in college, or they can request that payment be deferred until the student has completed their education (or ceases to be enrolled). During the "deferment" time, interest will continue to accrue, and it is recommended that the parent(s) attempt to make at least the minimum interest payments on a deferred loan-even though it is not required. To complete a parent PLUS loan application, the parent applying must go to www.studentloans.gov  and sign in with their own information and select to "Request a PLUS loan". After the application has been submitted to the Department of Education, the credit decision will be forwarded to UMES for processing within 24 to 48 hours. Please allow the UMES Office of Student Financial Aid 5 to 10 business days to process the loan application and credit decision.

    The Federal Direct Graduate PLUS Loan
    Source:
     Funds for this loan program are made available through the United States Department of Education.
    Criteria: Applicants must be U.S. Citizens or permanent residents, receive credit approval, and be in a graduate degree program.
    Award: The student may borrow up to the cost of attendance for a full time student less any other financial assistance received. This loan is meant to cover the portion of the cost of attendance that is not covered by the graduate unsubsidized loan. Repayment is the responsibility of the student and the student may choose to go into repayment while they are still enrolled in college, or they can request that payment be deferred until they have completed their education (or cease to be enrolled). During enrollment and the "deferment" time, interest will continue to accrue.

    The Perkins Loan Program
    Criteria: This program is open to all undergrad and grad students who are US citizens or to those who are permanent residents.
    Award: Award amounts vary depending on the students need based federal formula and the availability of funds. Deferments and cancellations are available for those who qualify. Program funds are extremely limited, so the Perkins Loan is awarded on a case by case basis by the Director of Financial Aid.

     

    Other Loan Options....

    ALTERNATIVE/PRIVATE LOANS   

    (for more information about Alternative/Private loans through Banks, click the link above)

    Significant Changes to the Federal Student Loan program beginning December 1, 2013

    Recent legislation has led to an increase to the cost of borrowing Federal Direct Loans. We have outlined some changes to help you understand the loan terms and conditions before you accept the loan on your award.

    Direct Loan Interest Rates

    The Bipartisan Student Loan Certainty Act

    This Act ties federal student loan interests rates to the 10-year treasury note. This will lower interest rates for borrowers taking out a loan on or after July 1, 2013. This Act re-establishes the interest rates for new Federal Direct Student Loans, moving them from a fixed interest rate of 6.8% for the Direct Unsubsidized Loan and 7.9% for the Direct Parent PLUS loan to a “fixed variable” interest rate that will established be each year on June 1 and effective on July 1 of that year. A “fixed variable” rate means that a new interest rate will be set each year, but the rate will be fixed for the life of the loan for any loans disbursed between July 1 of that year and June 30 of the next year. As a result this may mean that upon graduation a borrower may have a set of fixed-rate loans, each with a different interest rate. The bill also imposes a cap to ensure interest rates never exceed 8.25% for undergraduate students, 9.5% for graduate students, 10.5% for PLUS borrowers.

    Time Limitation on Direct Subsidized Loan Eligibility

    The Moving Ahead for Progress in the 21st Century Act

    This Act added a new provision to the Direct Loan statutory requirements that limits a first-time borrower’s eligibility for Direct Subsidized Loans to a period not to exceed 150% of the length of the borrower’s educational program. Under certain conditions, the provision also causes first-time borrowers who have exceeded the 150% limit to lose the interest subsidy on their Direct Subsidized Loans. More information is available in the Department of Education's document Time Limitation on Direct Subsidized Loan Eligibility for First-Time Borrowers on or after July 1, 2013.

    Direct Loan Origination Fees

    Budget Sequestration, 2013 (Budget Control Act of 2011)

    On August 2, 2011, Congress passed the Budget Control Act of 2011, which put into place automatic federal budget cuts, known as a “sequester,” to take effect if Congress failed to enact legislation to reduce the federal deficit by March 1, 2013. Because Congress did not act, these budget cuts are now in effect. The origination fee structure has changed for all Federal Direct Loans as of July 1, 2013. Direct Loan fees are deducted at the time of disbursement. They are as follows:

    Direct Federal Subsidized and Unsubsidized Loan:

     

    Impacted Stafford Loans Loan Fee 
    Percent
    Fee on a Loan 
    Amount of...
    First Disbursed Prior to 07/01/2013 (no sequester)    1.00 % $55.00 on  $5,500
    First Disbursed on or after 07/01/2013 and Before 11/30/2013 1.051% $57.80 on  $5,500
    First Disbursed on or after 12/01/2013 and Before 09/30/2014    1.072% $58.96 on  $5,500

     

    Direct Federal PLUS Loan:

     

    Impacted PLUS Loans Loan Fee 
    Percent
    Fee on a Loan
    Amount of...
    First Disbursed Prior to 07/01/2013(no sequester) 4.00% $400.00 on $10,000
    First Disbursed on or after 07/01/2013 and Before 11/30/2013 4.204% $420.40 on $10,000
    First Disbursed on or after 12/01/2013 and Before 09/30/2014    4.288 % $428.80 on $10,000

     

    Subsidized Stafford Loan Grace Period Interest Subsidy

    Consolidated Appropriations Act, 2012

    Both Stafford Loans (subsidized and unsubsidized) have a grace period during which repayment is not required until six months after the student graduates, withdraws, or is enrolled less than half-time. Previously, subsidized Stafford Loans maintained the interest subsidy during the grace period. The interest subsidy will no longer be provided during the grace period for first disbursements made on or after July 1, 2012, and before July 1, 2014.

    New Limit on Eligibility for Subsidized Stafford Loans

    Public Law 112-141

    A new borrower on or after July 1, 2013 will not be eligible for new Direct Subsidized Loans if the period during which the borrower has received such loans exceeds 150 percent of the published length of the borrower’s educational program. The law also provides that a borrower reaching the 150 percent limit becomes ineligible for interest subsidy benefits on all Direct Subsidized loans first disbursed to that borrower on or after July 1, 2013.

    Stafford and PLUS Loan Program Rebate

    Budget Control Act of 2011

    In the past, borrowers received an up-front rebate on loan fees. The new law eliminates the up-front origination fee rebate on all Stafford and PLUS loans. Stafford Loans will now be assessed the full 1% fee (from 0.5%) and the Parent PLUS/Graduate PLUS Loans will be assessed at 4% (from 2.5%), which will be deducted from each loan disbursement made on or after July 1, 2012.

    Significant Changes to the Federal Student Loan program beginning July 1, 2012

    The Budget Control Act of 2011, passed on August 2, 2011, brings about some significant changes to the federal student loan program. Here is a brief summary of provisions that go into effect July 1, 2012:

    • Federal Subsidized Direct Loans for graduate students are eliminated. This means all federal student loan money for graduates will be unsubsidized. In the 2012-13 award year the annual unsubsidized loan limit for graduate students is $20,500. Currently, qualifying students could receive up to $8,500 of the $20,500 in subsidized loans, which are interest free to the student while in a qualified period of deferment (this includes being enrolled at least half-time).
    • For all students, Direct Loan Repayment Incentives were eliminated. These incentives provided a means to make loans affordable on the front end and while in repayment. On the front end, rebates had been provided to reduce the origination fee, meaning the student receives more loan money to use for educational purposes due to fewer upfront fees deducted prior to disbursement. In repayment, students could qualify for reductions to their interest rate making the overall cost of the loan less expensive. The only repayment incentive that may still be possible is an interest rate reduction for a borrower who agrees to automatically debited electronic loan payments.
    • Grace Period Interest Subsidy eliminated on subsidized loans during the six month grace period. This means that even though you have 6 months after you cease to be enrolled before you have to begin making payments on your federal student loans, your subsidized loan funds will begin charging you interest immediately after you cease to enroll. Previously, the Department of Education would continue paying the interest on the subsidized loan until after the grace period had ended, then the student would go into full repayment.

     

    Before you decide to apply for private educational loans (alternative loans) for funding, please keep in mind the benefits of the federal student loan program that private lenders are not required to give you. There are more things to consider when taking out a student loan than just the interest rate. Please research all your options thoroughly and carefully. 

    For example, federal loans offer the following:

    • Congressionally mandated deferment and forbearance periods for qualifying borrowers.
    • Multiple repayment plan options to help make repayment more affordable. In some cases the payment could even be $0 for a period of time.
    • Loan forgiveness for qualifying borrowers.
    • Loan discharge due to death or permanent disability. This means if something happens to you along these lines the debt is forgiven and no one is responsible for it.
    • Fixed interest rate that will not increase if rates in the general economy increase in the future.
    • Tax deductions for loan interest paid to qualifying borrowers.