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.