Loans

William D. Ford Federal Direct Student Loans.  Federal Direct Student Loans (Direct Loans) are available for students directly from the federal government to pay for educational costs. To be considered for a Direct Loan, students must complete the FAFSA. Subsequently, the award letter issued by Rutgers will list eligibility for the program. Money for which students are eligible will be credited directly to their accounts. Because Rutgers has chosen to participate in Direct Lending, the university cannot accept any Federal Stafford applications from students or their lenders. Since the U.S. Department of Education is the lender for the Federal Direct Loan Program, borrowers will send all loan repayments to the department, rather than to several lenders.

In general, to be eligible for a Direct Loan, a student must have a high school diploma or a General Education Development (GED) certificate or meet other standards approved by the U.S. Department of Education, be a U.S. citizen or an eligible noncitizen, be enrolled at least half time per term, be making satisfactory academic progress, have a social security number, sign a statement of educational purpose, not be in default on prior loans or owe refunds to a federal grant program, and register with the U.S. Selective Service Administration (males only).

In addition to these requirements, all first-time Federal Direct Loan borrowers must attend an entrance interview in order to be informed of their rights and responsibilities regarding the loan.

Federal Direct Subsidized Loan.  This loan is based on financial need. The government pays the interest on the loan while the student is attending school. The interest rate is variable; that is, it is adjusted each year. Effective July 1, 1998, the maximum rate for the Federal Direct Loan was 8.25 percent. Additionally, borrowers are charged an origination fee of 3 percent. The amount students are permitted to borrow is based on their grade level and dependency status as defined by the federal government.

Federal Direct Unsubsidized Loan.  This loan is not based on financial need, and all interest charges must be paid by the student. The interest rate is the same as the Federal Direct Loan.

Federal Perkins Loan (formerly National Direct Student Loan-NDSL).  Federal Perkins Loans are available to students who are enrolled in a minimum of 6 credits per term, who are citizens or permanent residents of the United States, and who demonstrate need through the FAFSA. The maximum amount a graduate student can borrow under this program at Rutgers is $2,000 per academic year, with maximum aggregate loan amount not to exceed $30,000 (including undergraduate NDSL and Perkins loan totals).

Interest at the rate of 5 percent simple begins nine months after the borrower ceases to enroll in a minimum of 6 credits per term and extends over a maximum repayment period of 10 years. Monthly payments of at least $40 are required. Deferral of repayment is permitted for certain kinds of federal service, and cancellation of loans is permitted for certain public services.

Consistent with federal regulations, all first-time Federal Perkins Loan borrowers at Rutgers are required to attend an entrance interview in order to be informed of their rights and responsibilities regarding the loan. In addition, Federal Perkins Loan recipients must attend an exit interview prior to graduation or withdrawal from school. Further details and procedures regarding the repayment of the Federal Perkins Loan are sent to each student recipient by Rutgers, The State University of New Jersey, Office of Student Loans, Division of Accounting, 65 Davidson Road, Piscataway, NJ 08854-8094.

Emergency Loans.  Students who are experiencing an unusual financial emergency may apply for a university loan of up to $500. Students need not be recipients of financial aid or have filed a FAFSA to be considered. The interest rate is 3 percent, and the loan must be repaid within the same term (possibility of extension up to six months). An emergency need must be demonstrated and funds must be available.

Students should contact their local financial aid office for additional information. If loans in excess of this amount are required, an appointment with a counselor is recommended.

NJCLASS Loans.  This program was initiated by the state of New Jersey in 1991. This program makes loans available to parents or other relatives of dependent students and independent students. Since this is a nonfederal loan program, applicants undergo a credit check. Some borrowers may need to have a cosigner. The program offers loans up to the cost of education. The interest rate for these loans varies according to the bond issue terms under which you borrow. Families must file the FAFSA before being considered for this program.