TIP #1 Your Best Investment – Perkins Loan
Perkins Loans are awarded by the college to the neediest students based
on the information provided on the FAFSA.
This loan is interest free while you are enrolled in school
You are eligible for a 9-month grace period upon graduation
or withdrawal from college. A grace period allows time for an
individual to get settled in a job prior to entering payments on
their student loan.
It is awarded to you directly from the college and will be
credited to your student account.
Interest rate is fixed at 5% for the 2008-09 school year.
Most annual loan awards are divided and disbursed by term -
during the school year.
You may qualify for cancellation of up to 100% for this loan.
Paying for College –— What You
Need to Know about Student Loans
Serving Oregon Students Since 1959
Tip Sheet #2 Oregon Student Assistance Commission
March 2009
Oregon Student Assistance
Commission
1500 Valley River Drive
Suite 100
Eugene, OR 97401
(541) 687-7400
(800) 452-8807
(541) 687-7414 (fax)
www.GetCollegeFunds.org
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TIP #2 An Inexpensive Option – Subsidized Loan
Family Education Loan Program (FFELP) and Direct Loans
In 2008-09 school year, the interest rate is 6.0% fixed rate
for undergraduate students.
In the 2009-10 school year the rate goes down to 5.6% fixed.
In subsequent years, the interest rate drops to 3.4%.
This loan is interest free while you are in school enrolled
halftime or greater.
You do not make any payments while you are in college,
and you will receive a six-month grace period after you
graduate. During all periods where you qualify to have
payments deferred (postponed), the interest is paid by the
government on your behalf.
If you are a new student, loan funds are not received and
posted to your account until approximately 30 days after the
term begins.
If the school you attend participates in Direct Loans, the
government will be your lender. Otherwise, you will select
your own lender.
TIP #3 Another Inexpensive Option – Unsubsidized Loans
Federal Family Education Loan Program (FFELP) and Direct Loans
Interest continues to accrue from date of disbursement.
However, you do not have to make any payments while
you are attending college at least half time.
You will receive a grace period when you do not make
payments while you are attending college halftime or more.
Interest rate is 6.8% fixed for unsubsidized Stafford Loans.
Graduate Stafford Loans (both subsidized and unsubsidized)
have a fixed interest rate of 6.8% through 2013.
TIP #4 A More Expensive Option – PLUS Loan for Parent Borrowers
& Graduate Students
Parents and graduate students may borrow FFELP PLUS
loans at 8.5% interest rate.
The Direct Loan PLUS interest rate is 7.9%.
You may defer payments until after the student graduates or
begins repayment within 60 days of when the loan is fully
disbursed.
The interest will accrue from the date of disbursement.
A parent and/or a graduate student may borrow a PLUS Loan
up to the amount of the student’s cost of attendance less
financial aid awarded.
TIP #5 Short-Term Loans for Emergencies
These are usually offered directly from the college financial aid office,
and the provisions of the loan are decided by the college.
They usually last for just the term and may cover some small
amounts like books.
Short-term loans are often most helpful to students who are
waiting for other, long-term loans to be processed.
Tip Sheet #2
March 2009
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TIP #6 Very Expensive Loan Options – The Alternative Loans
If you still do not have enough funds and you have applied for everything
you are eligible to receive, this may be your last resort loan. Alternative
Loans are from a variety of private lenders and are similar to any
consumer loan.
They are based on credit ratings and may be in the parent’s name
or in the student’s name.
A student-borrower may be required to have a co-signer.
Some Alternative Loans require the school to certify the
application.
Some Alternative Loans will be mailed directly to the school, and
others are disbursed directly to the student.
Most of these loans have variable interest rates, and the rate may
be based on your credit score.
For some of these loans, the repayment may be deferred while the
student is in school; however, the interest will be accruing for all of
these loans.
TIP #7 An Option for Some Middle-Class Families – Home Equity Line
of Credit or Credit Cards
Some parents may be interested in borrowing against the equity in their
home to pay for their child’s college education. This is a consumer loan
directly from a lender with a variable or fixed interest rate.
You may borrow a set amount, or it may be a line of credit (LOC)
that can be accessed as the student progresses over the next few
years while in college. Some parents wonder whether they should
borrow a PLUS loan or just obtain a home equity LOC. You will
want to research this carefully.
Some interest paid on an LOC is deductible on your taxes; in other
cases it may not. The PLUS Loan borrower is covered in case of
death, disability, or deferment, and the LOC may not cover the
borrower unless additional insurance is obtained.
Now that many colleges accept credit cards, more families use
credit cards to pay for tuition. This is the most expensive way to
finance college costs!
Ask lots of questions and research this to make sure that you are
taking advantage of the best loan or credit source for you and your
family.
TIP #8 Borrow Now. Forgive Later – Loan Forgiveness Programs
There are numerous types of loans that may be forgiven in repayment.
Information about loan forgiveness programs is available from your
financial aid office.
Some teachers may have some loans forgiven for teaching in
certain low-income/high-need areas or based on curriculum.
The military offers loan payback programs for those who enlist in
the Army, Navy, or Air Force after college. For each year of active
duty, the service branch makes a payment of 33 ½% or $1,500,
whichever is greater, on your total remaining principal balance.
The Army and Navy will repay up to $65,000 in student loans.
High demand professions such as health care and nursing may
offer loan repayment for service in critical areas.
Tip Sheet #2
March 2009
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The Oregon Student Assistance Commission (OSAC) administers a variety of state,
federal,
and privately funded student financial aid programs, including grants and scholarships,
for the benefit of Oregonians attending institutions of postsecondary education.
The
agency helps over 50,000 Oregon students work toward their educational goals each
year.
(c) Copyright 2009, Oregon Student Assistance Commission, All rights reserved.
If you wish to make copies for educational purposes, contact OSAC at (541) 687-7400
ext. 7416
TIP #9 Loan Repayment
All loans must be repaid according to the provisions covered in your
promissory note.
Most loans begin repayment six months after you graduate,
withdraw from school, or drop to less than half-time enrollment.
When you enter repayment, you will have up to ten years to repay
these loans.
There may be options for graduated repayment or income sensitive
repayment (low paying occupations may qualify).
? Any time you are having trouble making payments, stay in
close contact with your lender.
Set up your monthly student loan payments to be paid by
electronic payments if possible. Why? This is the only way you
will be sure your payment is received on time.
Your lender may even give you some breaks on the interest rate for
consecutive on-time payments. Student loans are reported to the
credit bureau after disbursement and any late payments will
negatively affect your credit rating in the future.
TIP #10 Obtain a Copy of Your Credit Report Annually
Anytime you have a loan obligation, it is a good idea to request a free
annual copy of your credit bureau report to review for accuracy.
Caution: When borrowing, be responsible. Your education loans
will be an important part of your financial life. Know what you owe
and who you owe!