Loans

William D. Ford Federal Direct Loan Program

Federal Direct Student Loans allow 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/Ford Loan applications from students or their lenders. Since the U.S. Department of Education (USDOE) 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 USDOE, 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, for males, have registered with the Selective Service Administration.

In addition to these requirements, all first-time Federal Direct Stafford/Ford 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 Stafford/Ford Loan. This subsidized 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 2002-2003 rate is 4.06 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 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 Stafford/Ford 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 can borrow from this program to help pay for college expenses. Applications and promissory notes are available at the financial aid office. Similar to the Federal Direct Stafford/Ford Loan, the interest rate is variable. The 2002-2003 rate for a Federal Direct PLUS Loan is 4.86 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 (formerly the National Direct Student Loan-NDSL)

These loans are available to students who are enrolled for a minimum of 6 credits per term, who are citizens or permanent residents of the United States, and who demonstrate need through the financial aid form. The maximum amount a student can borrow under this program is $3,000 per academic year for an undergraduate who has not completed a program leading to the baccalaureate degree.

Simple interest at the rate of 5 percent begins six months after the borrower ceases to be enrolled for a minimum of 6 credits per term and extends over a maximum repayment period of ten years. Monthly payments of at least $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 recipients are required to attend an entrance interview in order to be informed of their rights and responsibilities regarding the loan. In addition, recipients must attend an exit interview prior to graduation or withdrawal from college. Further details and procedures regarding the repayment of this loan will be sent to each student recipient by the Student Loan Office of the university`s Division of Accounting.

Emergency Loans. Students who are experiencing a 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 (FAFSA) to be considered. The service charge is 3 percent per year, and the loan must be repaid within the same term. An emergency need must be demonstrated and funds must be available.

Students should contact the Office of Financial Aid for additional information. If loans in excess of this amount are required, an appointment with a financial aid counselor is recommended.

University College students are also eligible for Walter T. Elder Loans, which are established through gifts of alumni and friends of Walter T. Elder, former business manager of University College. Loans are of a short-term nature, usually for one term, and are interest-free until the due date. Delinquent loans are subject to a 3 percent charge per year. Loans are available to students who have completed a minimum of 15 credits in University College with a cumulative grade-point average of 2.0 (C) or better.