Loans

William D. Ford Federal Direct Loans (Direct Loans)

Direct Loans allow students and parents to borrow money directly 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 Direct Loan, students must complete the FAFSA. The financial aid award letter will list 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/Ford Loan applications from students or their lenders. Since the U.S. Department of Education (USDOE) is the lender for the Direct Loan program, borrowers send all loan repayments to the USDOE 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 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 Subsidized Stafford/Ford Loan and Federal Direct Unsubsidized Stafford/Ford Loan borrowers must attend an entrance interview in order to be informed of their rights and responsibilities regarding the loan and an exit interview prior to withdrawal from college or graduation.

Federal Direct Subsidized Stafford/Ford Loan.  This loan is 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 maximum rate for the Federal Direct Subsidized Stafford/Ford Loan is 8.25 percent. Additionally, borrowers are charged an origination fee of up to 4 percent. Students may borrow a combined total of $18,500 each year from the Federal Direct Subsidized Stafford/Ford Loan and Federal Direct Unsubsidized Stafford/Ford Loan programs.

Federal Direct Unsubsidized Stafford/Ford Loan.  This loan is 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 Stafford/Ford Loan. Students may borrow a combined total of $18,500 each year from the Federal Direct Subsidized Stafford/ Ford Loan and Federal Direct Unsubsidized Stafford/Ford Loan programs.

Federal Perkins Loan

These loans are available on a limited basis to graduate 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.

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. Monthly payments of at least $30-$40 are required. Deferment of repayment is permitted for certain kinds of federal service and cancellation of loans is permitted for certain public services.

All first-time 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, Perkins Loan recipients must attend an exit interview prior to graduation or withdrawal from college. Further details and procedures regarding the repayment of the Perkins Loan will be sent to each student recipient by Rutgers, The State University of New Jersey, Office of Student Loans, Division of Student Financial Services, 65 Davidson Road, Piscataway, NJ 08854-8093.

Emergency Loans.  Students who are experiencing a financial emergency may apply for a university loan of up to $500. The interest rate is 3 percent simple, and the loan must be repaid within the same term. An emergency need must be demonstrated and funds must be available.

Students should contact their local financial aid office for additional information. If a loan in excess of this amount is required, an appointment with a counselor is recommended. Students do not need to be recipients of financial aid nor do they need to have filed a financial aid application to be considered for these loans.

A number of graduate schools offer low-interest or interest-free short-term loans to students in their program. Students should request additional information from the various deans/directors of each program.

NJCLASS Loans

The NJCLASS, initiated by the state of New Jersey and administered by the New Jersey Higher Education Assistance Authority (NJHEAA), is a loan program that makes loans available to students regardless of income level. Students must be permanent New Jersey residents classified as citizens or eligible noncitizens of the United States for at least six months prior to filing the NJCLASS Loan application. Students also must file all financial aid information required by the school to determine the student`s eligibility for Federal Direct Loans, and must accept loan funds from these programs, if eligible, before applying for NJCLASS Loan funds. There is no annual aggregate loan limit and the interest rate may be fixed or variable. For more information about NJCLASS, call the NJHEAA Financial Aid Hotline at 800/792-8670.