Financial Aid

Frequently Asked Questions

Loans

What is the difference between a Stafford Subsidized loan and a Stafford Unsubsidized loan?

Both loans are a part of the Federal Stafford student loan program. However, a subsidized loan is a need based loan, where the federal government will pay the interest on the loan up until the loan goes into repayment (six months after graduation or once a student’s status is less than half- time.)

On an unsubsidized loan - interest starts to accrue from the first disbursement until the loan has been paid in full, meaning the student is responsible for the interest for the life of the loan. Students can, however, elect to pay quarterly on the interest while they are in school.

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What is the interest rate on loans?

The current interest rate for:

• Federal Stafford loans –
  • Subsidized 6.0% fixed
  • Unsubsidized 6.8% fixed
• PLUS loan – 8.25% fixed
• Private/Alternative loans – varies (current average is up to 17%)

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What is the difference between Federal Stafford loans and private/alternative loans?

Typically, Federal Stafford loans require the completion of the FAFSA, have lower interest rates, longer repayment terms, and may have postponement payment options.

Private/Alternative loans do not require a FAFSA to be completed, however, they are determined on credit history, may require a co-signer, and have no cap on interest rates.

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What is a PLUS loan?

This is a non-need based loan program for parents of dependent undergraduate students or for graduate students who do not qualify for other programs. The parent(s) may borrow up to the amount of the student's cost of attending Lewis University. Repayment begins 60 days after the second disbursement is made. Interest rates vary, and will cap at 10%. Parents can obtain a PLUS loan application through the Office of Financial Aid, a local bank, credit union, or savings and loan institution.

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How do I apply for a parent PLUS loan?

To receive a PLUS loan, a dependent student’s parent must complete a PLUS Master Promissory Note (MPN) and if required by the school, a FAFSA. A parent has the ability to call, fax or go online to a PLUS loan provider and apply directly through the lender.

For a list of Lewis University’s preferred lenders go here.

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Do my parents need to fill out a PLUS loan application every year?

Yes, your parent needs to reapply for a PLUS loan every year due to changing terms and interest rates and also, a parent(s) credit history changes from year to year.

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What is the difference between a PLUS parent loan and a private/alternative loan?

A PLUS loan has a fixed rate, they are easier to qualify for and if a parent is denied for a PLUS loan, the student will automatically be eligible for an additional Unsubsidized Stafford loan amount. PLUS loans can be consolidated and the parent has the option of deferring repayment for up to 48 months while student is still enrolled at least half-time. PLUS loans also provide some tax savings and incentives.

Private/alternative loans have a variable interest rate with no cap, loans are in the student’s name which often requires a co-borrower who will also be responsible for any outstanding debt. Consolidation and deferment are at the discretion of the lender and there are no tax benefits.

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Which loan would be more beneficial for me to apply for – a parent PLUS loan or a private/alternative loan?

If a PLUS loan is an option, the PLUS loan is more beneficial – even if your parent(s) do not think they will qualify. If a parent is denied a parent PLUS loan the student becomes eligible to receive additional funds in an unsubsidized loan.

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Do I need to apply for a loan every year?

For Federal Stafford student loans, no – a completed FAFSA is all that is required. For any outside loans, such as PLUS or private, yes – due to changing terms, interest rates and borrower’s credit history.

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Is there a limit to how much loan money I can request?

Yes. For additional loans such as PLUS or private loans the amount awarded cannot exceed the student’s budget or cost of attendance less other aid. Federal Stafford loans are limited to the designated amounts for each academic grade level.

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How long does it take to process and receive a private/alternative loan?

Once a student has applied online and provided the lender with all the required paperwork, the lender will notify the school and ask for loan certification.

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What does deferment mean?

Deferment is the postponement of repayment of loans for various, specific circumstances. For more in depth information please visit the Federal Student Aid website.

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What does forbearance mean?

According to the Federal Student Aid website, forbearance is the temporary postponement or reduction of payments because of the borrower’s financial difficulties. Forbearance may also be an extension of the repayment period. All borrowers are charged interest during forbearance.

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How long is the grace period before I go into repayment?

For Stafford student loans the grace period is six (6) months after graduation or once a student has dropped below half-time status.

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When do my loans go into repayment?

Once a student has graduated, dropped below half-time status or has left school the student has a six (6) month grace-period, before repayment begins. Please visit the Federal Student Aid website for more in depth information regarding loan repayment.

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What is the difference between a FFELP loan and a Direct Loan?

A FFELP (Federal Family Education Loan Program) loan offers loans that are funded by private lenders, guaranteed by guarantors and reinsured by the federal government. Lewis University uses this program.

A Direct Loan is issued under the William D. Ford Federal Direct Loan Program. The main difference between a FFELP loan and Direct Loan is the government funds a Direct Loan.

Both programs have the same general terms, conditions, interest rates, benefits and loan amounts.

Although some colleges offer both, you may only borrow under one program during an enrollment period.

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Is Lewis University a direct lending school?

No. Lewis University uses FFELP (Federal Family Education Loan Program).

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What is a guarantor?

A guarantor is the state or private agency that administers the FFEL program in each state, for the state of Illinois this would be the Illinois Student Assistance Commission (ISAC).

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What is a Perkins loan?

The Federal Perkins Loan Program provides low-interest loans to help needy students finance the costs of postsecondary education.

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How would I apply for a Perkins loan?

The Office of Financial Aid Services has the authority to determine who is eligible to receive the Federal Perkins loan. Lewis University has a limited amount of Perkins funds each year, in order to be considered for a Perkins loan the student must be Pell eligible.

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How do I repay a Perkins Loan?

The Federal Perkins loan has a nine (9) month grace period before repayment is started and repayment of a Perkins loan is made to the school where the loan was given.

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What is an aggregate loan limit?

An aggregate loan limit is the cap or limit a student is allowed to borrow in loans. For Stafford student loans:

Undergraduate Aggregate – $57,500 Total ($23,000 subsidized)

Graduate/Professional Aggregate – $138,500* Total ($65,000 subsidized)

*includes undergraduate amounts

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Who determines my lender?

The student chooses their lender when they complete their Billing/Loan Information Form .

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Can I apply for loans online?

Yes, most lenders have the option of applying for loans and completing the Master Promissory Note (MPN) online. To utilize one of Lewis University’s preferred lenders click here.

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What is an MPN?

A Master Promissory Note (MPN) is the loan application from the lender. For Stafford student loans, a MPN only has to be filled out once. For additional loans where yearly reapplication is required a new MPN will be required.

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Can I complete my MPN online?

Yes, most lenders have the option of filling out an MPN online. Contact your lender for more information. If you are utilizing one of Lewis’s preferred lenders, click here.

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