Office of Scholarships and Financial Aid

Loans

Federal Perkins Loan:  This loan is a long-term, low-interest (5 percent), need-based loan awarded by the OSFA.  It is offered to full-time students who are U.S. citizens or permanent residents.  Students may borrow up to $4,000 annually, $20,000 maximum for undergraduate study.  Perkins Loans are intended for students who have exceptional financial need and are on-time applicants.  Due to limited funding, only undergraduate students are awarded Perkins Loans at CMU.

Federal Stafford Direct Loan Program: Under this program students borrow money directly from the federal government without going through a private lender.  Students do not have to complete a separate loan application and all loans may be consolidated under one lender.  Loan proceeds are deposited directly into student accounts each semester, eliminating the need for separate check processing.  Repayment of the loan principal begins six months after the student is no longer attending school on at least a half-time basis. Federal Direct Loans have a fixed interest rate of 6.0% for subsidized loans and 6.8% for unsubsidized loans.

·        Federal Direct Subsidized Student Loan:  “Subsidized” means the federal government pays the interest on these loans while the student is in school, during the grace period and during deferments (postponements of repayment).  Students must show financial need to receive this type of loan.

·        Federal Direct Unsubsidized Student Loan:  “Unsubsidized” means the federal government does not pay the interest while the student is in school, during the grace period or in deferment. Students qualify for an unsubsidized loan regardless of financial need.  Students are responsible to pay the interest on this loan quarterly or may choose to capitalize the interest.

·        Federal PLUS Loan (Federal Direct Parent Loan for Undergraduate Students):  These loans are non-need-based loans for parents with good credit histories who want to borrow for their dependent students.  Under this program, parents can borrow up to the total cost of education minus other expected financial assistance.  There is no grace period or deferment period.  This means that interest begins to accumulate at the time the first disbursement is made.  Parents must begin repaying both principal and interest while the student is in school.  Generally, repayment begins within 60 days after the second disbursement of the loan.  Federal Direct PLUS Loan interest is fixed at 7.9%

    Federal Graduate PLUS (Federal Loans for Graduate Students):  The PLUS Loan program has been modified to allow graduate students to borrow a PLUS loan.  This program is for students in graduate level programs only.  Students must be enrolled at least half-time to receive the loan.  Students must file the FAFSA to be considered for a Grad PLUS.  The OSFA must determine what Direct Loan for which a student may be eligible before a Graduate PLUS loan can be processed.  This loan is a non-need loan for students with good credit histories.  Applicants may borrow up to the cost of attendance minus other financial assistance.  Students will receive an automatic deferment while enrolled at least half-time.  The  Grad PLUS is not a subsidized loan; consequently, interest will accrue beginning with the first disbursement of the loan.  Federal Direct  Grad PLUS Loan interest rate is fixed at 7.9%.

- Fees:  Student borrowers of Direct Loans are assessed a 3% origination fee prior to loan disbursement.  PLUS borrowers are assessed a 4% origination fee prior to loan disbursement.

- Rebates:  Borrowers will receive a 1½% rebate on their Federal Direct Loans.  Although the rebate is added to each loan disbursement, it does not become permanent until the borrower makes the first 12 monthly loan payments on time.  If the borrower does not meet this requirement, the rebate must be repaid.

 - Processing Your Federal Direct Loan(s):  All documentation (e.g., verification documentation)    required to process your loan(s) must be submitted by the following dates:

                    November 1                                Fall Semester loan
                     March 15                                    Spring Semester or Fall/Spring academic year loan
                     June 1                                          Summer Session loan

FEDERAL DIRECT STUDENT LOAN LIMITS:

MAXIMUM LOAN AMOUNT FOR A FULL ACADEMIC YEAR

                                             Dependent
Credit Hours Earned               Student                                         Independent Student

Freshman (0-25)                       $5,500                            $5,500 + $4,000   =    $ 9,500

Sophomore (26-55)                  $6,500                            $6,500 + $4,000   =    $10,500

Junior (56-85)                           $7,500                            $7,500 + $5,000   =   $12,500

Senior (86 +)                             $5,500                            $7,500 + $5,000   =   $12,500

Graduate/Professional                   N/A                           $8,500 + $12,000  =   $20,500

NOTE:  Your loan limit cannot exceed your cost of attendance minus other financial aid you receive.

 

CUMULATIVE LIMITS

SUBSIDIZED (NEED-BASED) LOANS:

Undergraduate Study                                                                                                          $23,000

Graduate Study, including loans for Undergraduate Study                                                 $65,500

SUBSIDIZED LOANS PLUS UNSUBSIDIZED (NON NEED-BASED) LOANS:

Dependent Undergraduate Student                                                                                     $31,000

Independent Undergraduate Student                                                                                   $57,500

Graduate or Professional Student, including loans for Undergraduate Study                    $224,500   



ALTERNATIVE LOANS

Why would I need an alternative loan?

If the financial aid a student receives from CMU will not be enough to cover the costs to attend, the student and their parent(s) can decide to pursue other loan options. Unlike Federal Direct Loans, alternative loans are private supplemental loans that are NOT guaranteed by the federal government. These loans can supplement federal aid for creditworthy students and their families.

Do I have to apply for federal financial aid?

If eligible to file, CMU always recommends that a student first file a FAFSA form and accept the federal financial aid offered to them (including the Federal Direct Loan). The federal loan programs will have the lowest interest rate for the student borrower.

What is the requested loan period?

Alternative loan applications will ask students for a requested loan period.  You should use the following dates:

Summer 2008:  05/05/2008 to 07/31/2008            

Spring 2008 only:  12/20/2007 to 05/03/2008

Fall ONLY 2008  08/18/2008 to 12/13/2008

Fall 2008 AND Spring 2009 08/18/2008 to 05/09/2009

Spring 2009 only 12/18/2008 to 05/09/2009

 

Be Wary of Private Loan Offers

The growing problems with private loans has led the House Education and Labor Committee to question the $85-billion-a-year student loan industry by asking the Federal Trade Commission to investigate the unfair and deceptive practices that lenders use to market their products and services to students. Following is a quote from the announcement of their request.

 

"Every day, millions of students receive marketing letters from private lenders - letters that are often intentionally designed to confuse or mislead students. These tactics are nothing short of predatory lending. No company should be able to get away with using aggressive scare tactics to profit off students who are already taking on enormous amounts of college loan debt. Just like any other group of consumers, students and their families deserve to be protected from any fraudulent or manipulative marketing practices."

 

College students are cautioned to be suspicious of unsolicited loan offers. Student loan debt can accumulate quickly and result in a lifetime burden of high payments and credit denials for automobile purchases, credit cards, and home mortgages. Private loans also can reduce eligibility for more desirable federal, state and college aid programs. To avoid these problems, read and understand the terms and conditions of all loans.

 

Michigan students are bombarded by media advertisements and mailings about private student loans.  The Michigan Student Financial Aid Association (MSFAA) reminds students and families to beware of loan offers you did not initiate. Deceptive marketing tactics are not illegal in the world of private student loans. It is always in a student’s best interest to explore federal loan options before applying for private loans. Here are some simple rules to follow when considering a private loan.

  1. All students should file the Free Application for Federal Student Aid (FAFSA) to determine eligibility for grants, work-study, federal loans, and other desirable forms of student aid.
  2. Students should only consider a private education loan if they have reached their federal loan borrowing limit.
  3. Undergraduate students and parents should compare private loan costs with costs for the Federal PLUS Loan.
  4. Graduate students can borrow under the Federal Graduate PLUS Loan and should compare PLUS costs to private education loan costs before applying for a loan.
  5. The financial aid offices at Michigan colleges and universities are staffed with knowledgeable people with years of experience who will be happy to answer your student aid questions.

Who should I borrow from?

CMU will process ANY alternative loan for which a student has been approved and has financial need up to the cost of attendance. CMU cannot choose a lender for you but can assist you in determining how much you can borrow. 

Students are encouraged to research additional lenders online by searching “alternative educational loans.” It is important that a student only apply for one alternative loan at a time.

Students should research private student loan options at reputable web sites such as FinAid.ORG
( www.finaid.org/loans/privatestudentloans.phtml ).

For a partial comparison list of lenders with links to applications CLICK HERE then follow the prompts to select "Michigan" and then select "Central Michigan University"

 

BORROWING SENSIBLY

Although an alternative loan is a convenient source of additional funding for your education, it is important to budget and borrow carefully:

·        Consider ways to keep your costs down in order to limit your total loan debt.

·        Once you decide to borrow, borrow only what you need, because you must repay loans, with interest.

·        Before you borrow, it is wise to estimate both the amount of debt you may be able to afford and the potential monthly loan payment you can expect after you graduate.

Also, take very seriously the responsibility of borrowing and repaying an educational loan:

·        Be sure to read and understand the terms and conditions on your promissory note. You are agreeing to repay the loan with all the accrued and capitalized interest and deducted fees.

·        It is your responsibility to read and keep all your records and contact your lender regarding any changes in your status as a student.

·        You are obligated to repay your loan regardless of whether you complete your education, are satisfied with your education, or are able to find a job.

·        Alternative loans can be consolidated but not in combination with Federal loans. The two loan types must be consolidated separately.

How conscientiously you make payments on your student loan will affect your ability to borrow for a car, a house, or other purchases in the future. If you are late with your student loan payments, it will have a negative effect on your credit history. On the other hand, repaying your student loan on time can help you establish and maintain an excellent credit history.