Loans

William D. Ford Federal Direct Loan Program

The Federal Direct Loan program allows students and parents to borrow money from the federal government to pay for education, eliminating the need for an outside lender, such as a bank. In order to be considered for a Federal Direct student loan, students must complete the FAFSA. The financial aid award letter lists eligibility for the program. Money for which students are eligible is credited directly to their accounts. Because Rutgers participates in this program, it cannot accept any Federal Stafford Loan applications from students or their lenders. Since the U.S. Department of Education is the lender for the Federal Direct student loan program, borrowers send all loan repayments to the USDOE rather than to several lenders.

In general, to be eligible for a Federal Direct student 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 United States 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 federal grant programs, and if required, have registered with the Selective Service Administration.

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. Based on financial need. The federal 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. The 2004-2005 rate was 3.37 percent. Additionally, borrowers are charged an origination fee of 1.5 percent. Students may borrow $2,625 for first-year undergraduate study, $3,500 for the second year, and $5,500 for each of the third, fourth, and fifth years.

Federal Direct Unsubsidized Loan. Not based on need. All interest charges must be paid by the student. The interest rate and loan maximums are the same as for the Federal Direct Subsidized Loan. However, students who have proven independence may borrow an additional $4,000 in each of the first and second years, and an additional $5,000 in each of the third, fourth, and fifth years.

Federal Direct PLUS Loan. Parents of dependent students may borrow from this program to help pay for college expenses. Applications and promissory notes are available at the Office of Financial Aid. Similar to the Federal Direct Stafford Loan, the interest rate is variable. The maximum rate for a Federal Direct PLUS Loan is 9 percent. Additionally, borrowers are charged an origination fee of 2.5 percent. This loan allows parents to borrow up to the cost of education minus other financial aid received by the student.

Federal Perkins Loan

Available to students who are enrolled in a minimum of 6 credits per term and who are citizens or permanent residents of the United States. The Perkins Loan is awarded to students who demonstrate need through the FAFSA. The cumulative amount a student can borrow under this program is $20,000 for undergraduates.

Interest at the rate of 5 percent simple begins nine months after the borrower ceases to be enrolled in a minimum of 6 credits per term and extends over a maximum repayment period of 10 years. Deferment of repayment is permitted for certain kinds of federal service, and cancel-lation of loans is permitted for certain public services.

Federal Direct and Perkins Loan recipients must also attend an exit interview before graduation or upon withdrawal from the university.

NJCLASS Loan

Students or parents, legal guardians, spouses or relatives may borrow a fixed-rate loan; graduate or professional students may borrow a variable-rate loan offered through this state supplemental student loan program. The borrower must file all financial aid information to determine the student`s eligibility for federal Stafford loans prior to having eligibility certified by Rutgers for NJCLASS funds. The NJCLASS loan may not exceed the student`s estimated cost of attendance minus other financial assistance. Applications for the fixed-rate program are available online at http://www.hesaa.org. Applications may also be obtained at the Office of Financial Aid or by calling 800/792-8670.

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 nor have filed a financial aid form to be considered. Loans must be repaid within the same term. An educationally related emergency need must be demonstrated as well as a method to repay the loan promptly. All loans are contingent upon available funds.

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.