STUDENT LOANS: FEDERAL PROGRAMS
The following information on the Federal Student Loan Programs is meant to give you a brief overview of the programs available at the School of Mines. Links to detailed information on the Federal Loan Programs is provided below within each program description.
To be considered for the Federal Student Loan Programs, students must file a new Free Application for Federal Student Aid (FAFSA) each year (Click Here for filing options). You must be a fully admitted degree-seeking student at the School of Mines in order to have disbursed Federal Student Aid of any type. Unless otherwise noted, these programs are available to both graduate and undergraduate students who are enrolled at least half time.
Whether you borrow a Perkins or Stafford loan, you must carefully consider your Responsibilities and Rights as a student loan borrower. Borrowing a student loan can open windows of opportunities for pursuing a post-secondary education that would not otherwise be possible. However, borrowing more than you really need to finance your college education can also have the effect of dictating your career choices after graduation. Without a doubt, SDSM&T students have the potential to make above average incomes once they have graduated. However, students should always carefully consider the amount of loan funds they borrow throughout the course of their college education.
Students who borrowed student loans at some time during the course of their academic career (not just at the School of Mines) and graduated from the School of Mines with a Bachelors Degree during the 2008-2009 academic year, had an average federal student loan indebtedness of $14,854. If taking the full 10 years to repay at an assumed interest rate of 6.8%, the monthly payments on this average indebtedness would be approximately $171 per month. Your payments could be less depending on the interest rate(s) on the Federal Loans you have taken out to fund your education. How much you borrow depends on your situation and your committment to borrow as little as possible. Consider your options carefully and make the right decision for you based on your career goals and future earning potential.
Federal Perkins Loans: This Federal loan program is administered by the School of Mines and like any loan, must be repaid. Awarding priority is given to students who show financial need through the FAFSA and who have met our March 15th initial priority awarding date. Although the annual loan limits set by Congress are $5500 a year for undergraduate students and up to $8000 a year for graduate students, in an effort to make this loan program available to as many of our students as possible, the maximum annual award at this time at the School of Mines is $1000 (however, depending on the situation and available funds, this amount can be more). Students who borrowed Perkins loans while attending and graduating from the School of Mines during the 2008-2009 academic year, had an average Perkins indebtedness of approximately $2,400. This would result in a minimum monthly payment of $40. Students are under no obligation to accept a student loan and should do so only after considering the long-term implications of borrowing more than what is really needed to attend college.
Arrangements will be made to obtain the student's signature on a Master Promissory Note (MPN) before the first disbursement of the Perkins Loan. Students must also sign a statement prior to each disbursement showing their total Perkins borrowing at the School of Mines. Repayment is to be worked out with the Business Office when the borrower graduates or are no longer enrolled at least half time. No payments are required during any period of at least half time enrollment at at an eligible post-secondary institution or when approved for one of the many available deferments. (However, it is the borrowers responsibility to file the necessary paperwork with the Business Office or our loan servicing agent before an eligible deferment will be processed.) During the repayment period, the interest rate on this loan is 5% on the unpaid principal balance. Depending on how much has been borrowed, repayment may be up to 10 years. The MPN will detail the deferments that are available and under what circumstances the Perkins Loan can be canceled. This information is also available at the Perkins Loans and Responsibilities and Rights links.
Perkins Loan borrowers should also review the information available from the SDSM&T Perkins Loan Office for further information regarding benefits and available services.
Federal Direct Loan Program: In September 2009, the U.S. House of Representatives passed the Student Aid and Fiscal Responsibility Act (HR 3221). This act mandates the elimination of the Federal Family Education Loan (FFEL) program (including Stafford, Grad PLUS and Parent PLUS) and requires that all Federal student loans disbursed after July 1, 2010 be made under the William D. Ford Direct Loan program. Although this bill has not yet passed the U.S. Senate, schools currently participating in the FFEL program have been strongly encouraged by the U.S. Department of Education to begin preparations to transition to Direct Loans. With this guidance in mind, SDSM&T has decided to selectively begin awarding Direct Loans for the 2010 spring semester. If you have been awarded a Direct Loan, your award letter will include information on finalizing your loan.
You do not need to choose a lender for a Direct Loan. Direct Loan funds are disbursed directly from the Federal Government, and like any loan, must be repaid. Subsidized Direct Loans for undergraduate borrowers with a first disbursement on or after July 1, 2009 (but before July 1, 2010) have a fixed interest rate of 5.6%. Subsidized Direct Loans for undergraduate borrowers with a first disbursement on or after July 1, 2010 (but before July 1, 2011) have a fixed interest rate of 4.5%. Subsidized Direct Loans for graduate borrowers and Unsubsidized Direct Loans for all borrowers have a fixed interest rate of 6.8%. While you are in school, the Federal Government pays interest on the Subsidized Direct Loan for you; however, you are responsible to pay the interest on the Unsubsidized Direct Loan.
Your award letter shows the eligible loan program and the maximum amount you are able to receive based on your grade level, Estimated Cost of Attendance, Expected Family Contribution and other financial aid you are receiving. You are under no obligation to accept a student loan and should do so only after considering the long-term implications of borrowing more than you really need to attend college.
Repayment will be according to the provisions of your Direct Loan Master Promissory Note. You are expected to contact Direct Loan Servicing when you graduate or cease to be enrolled on at least a half time basis.
First-time Direct Loan borrowers must complete a Master Promissory Note (MPN)and Loan Entrance Counseling.
Federal Stafford Loan Program: This loan is obtained from a bank or credit union and like any loan, must be repaid. Subsidized Stafford Loans for undergraduate borrowers with a first disbursement on or after July 1, 2009 (but before July 1, 2010) have a fixed interest rate of 5.6%. Subsidized Stafford Loans for undergraduate borrowers with a first disbursement on or after July 1, 2010 (but before July 1, 2011) have a fixed interest rate of 4.5%. Subsidized Stafford Loans for graduate borrowers and Unsubsidized Stafford Loans for all borrowers have a fixed interest rate of 6.8%. While you are in school, the Federal Government pays interest on the Subsidized Stafford for you; however, you are responsible to pay the interest on the Unsubsidized Stafford. All fees that are required to be withheld from the loan disbursement will be disclosed on the Notice of Guarantee and Disclosure Statement.
Your award letter shows the eligible loan program and the maximum amount you are able to receive based on your grade level, Estimated Cost of Attendance, Expected Family Contribution and other financial aid you are receiving. You are under no obligation to accept a student loan and should do so only after considering the long-term implications of borrowing more than you really need to attend college.
Repayment will be according to the provisions of your Stafford Master Promissory Note. You are expected to contact your lender when you graduate or cease to be enrolled on at least a half time basis.
With few exceptions, the School of Mines electronically processes Stafford Loans and receives funds via Electronic Funds Transfer (EFT) to be applied to your account in our Student Accounts Office. You are advised to carefully read and respond immediately to information you receive from your lender or guaranty agency, especially if you must complete, sign and return forms to them. Keep copies of any correspondence you send to them for future reference. If not disbursed by EFT, loan proceeds are sent to the school for disbursement to you and must be picked up during fee payment each semester or at the Student Accounts Office in the upper level of the Surbeck Student Union. You are not required to make payments on the principal balance until 6 months after you cease to be at least a half-time student or during any eligible deferment period. Your promissory note will detail the deferments that are available to you and under what circumstances your Stafford Loan can be canceled. This information is also available at the Stafford Loan and Responsibilities and Rights links.
Federal Consolidation Loans: Students and parents may have borrowed from multiple federal loan programs or multiple lenders. If that is the case, they may be having difficulty making the monthly payments. A loan consolidation can help to lower the monthly payments while giving the borrower more time to repay. Although a consolidation loan can help to ease the burden of monthly payments, the borrower will pay much more in interest over the life of the loan and lose many of the provisions of their original loan promissory note. The advantages and disadvantages should be weighed carefully before agreeing to a loan consolidation. In addition to the information provided by the U.S. Department of Education via the link at the beginning of this paragraph, your first stop should be to contact your student loan lender to discuss loan consolidation options available through them.
Federal GRAD PLUS Loan: This program is available only to Graduate students who have been awarded their annual maximum for the Subsidized & Unsubsidized Stafford or Direct Loan programs. The GRAD PLUS loan is available through either the FFEL or Direct Loan program and like any loan, must be repaid. FFEL GRAD PLUS loans with a first disbursement on or after July 1, 2006, have a fixed interest rate of 8.5%. Direct GRAD PLUS loans have a fixed interest rate of 7.9%. The GRAD PLUS Loan Program is available to students with good credit histories who are enrolled at least half time. The annual loan limit is the estimated cost of education minus any financial aid received by the student (i.e., grants, loans, scholarships, work, etc.). All fees that are required to be withheld from the loan disbursement will be disclosed on the Notice of Guarantee and Disclosure Statement. Repayment of the GRAD PLUS loan begins within 60 days of the loan period's final disbursement on the loan (for example, after the spring semester disbursement for a fall/spring loan). Instructions for repayment are included with the application.
Unlike the Parent PLUS Loan in which filing the FAFSA is an option, applicants for the GRAD PLUS loan must file a new FAFSA each school year. Paper loan applications are available from your lender or through the Financial Aid Office and will be mailed upon request. The student is to complete the application and return it to the Financial Aid Office. School information will be added and then submitted to the lender indicated by the student or Direct Loan Servicing. For FFEL GRAD PLUS loans, if the lender participates in the Electronic Funds Transfer (EFT) process, the proceeds will be applied to the student's account in the SDSM&T Student Accounts Office. If not, then a paper loan check will be mailed to our office for disbursement. Direct GRAD PLUS loan funds will be electronically received and applied to the student's account.
Federal Parent PLUS Loan: This loan program is available only to the parents of dependent students pursuing an undergraduate degree. The Parent PLUS loan is available through either the FFEL or Direct Loan program and like any loan, must be repaid. FFEL Parent PLUS loans with a first disbursement on or after July 1, 2006, have a fixed interest rate of 8.5%. Direct Parent PLUS loans have a fixed interest rate of 7.9%. The Parent PLUS Loan Program is available to parents with good credit histories who wish to borrow for a dependent student enrolled at least half time. The annual loan limit is the estimated cost of education minus any financial aid received by the student (i.e., grants, loans, scholarships, work, etc.). However, parents should never borrow more that what is absolutely necessary to help the student offset their costs for attending the School of Mines. All fees that are required to be withheld from the loan disbursement will be disclosed on the Notice of Guarantee and Disclosure Statement. Repayment of the Parent PLUS loan begins within 60 days of the loan period's final disbursement on the loan (for example, after the spring semester disbursement for a fall/spring loan). The parent borrower can elect to defer payments on the principal until six months after the date the student ceases to be enrolled at least half time; however, interest continues to accrue, which can be paid monthly, quarterly or allowed to capitalize the interest quarterly (add accrued interest to the principal balance). Instructions for repayment are included with the application.
Applying for financial aid using the FAFSA is not currently required to obtain a Parent PLUS Loan, but is highly recommended to determine the student's eligibility for all forms of Federal Student Aid. Whether a FAFSA is filed or not, if a parent wants to apply for a Parent PLUS loan, we ask that the Federal Direct Parent PLUS Loan Form be printed off, completed and returned to our office for processing. Paper loan applications are available from your lender, Direct Loan Servicing or through the Financial Aid Office and will be mailed upon request. The family is to complete the application and return it to the Financial Aid Office. School information will be added and then submitted to the lender indicated by the student or Direct Loan Servicing. If the lender participates in the Electronic Funds Transfer (EFT) process, the proceeds will be applied to the student's account in our Student Accounts Office. If not, then a paper loan check will be mailed to our office for disbursement. Direct Parent PLUS loan funds will be electronically received and applied to the student's account. Whether the proceeds are sent via EFT or paper check, any funds in excess of what is needed to pay the student's bill are expected to be used to assist the student in paying for educationally related expenses. Parents should carefully consider how much they agree to borrow and not borrow more than what is needed for the academic year.
What lender should you use? If you have previously borrowed from the Federal Family Education Loan Programs (Stafford, GRAD PLUS or Parent PLUS), for attendance at the School of Mines or one of the other five universities in South Dakota (BHSU, DSU, NSU, SDSU or USD), your lender information will be printed on your award letter. If you have previously borrowed from the Federal Family Education Loan Programs, but not for attendance at the School of Mines or one of the other universities listed above, we recommend that you review your previous Notice of Loan Guarantee and continue to borrow from the same lender. Since we need the name of the lender to process your loans, check your records and enter their name, lender code and location on your award letter. If it is an out-of-state lender, please provide the lender's full address and the name of the guaranty agency.
The School of Mines does not advocate the use of one student loan lender over another or what many schools refer to as a "preferred lender list". Therefore, we will not and can not tell you what lender to use. Students and parents are free to choose which bank or credit union they wish to borrow a student loan from. However, there are some things you should keep in mind when selecting a lender:
1) Do they offer borrower benefits for on-time payments or for having monthly payments deducted from your bank account;
2) What is their customer service record like (check with your state Attorney General's Office or your state Better Business Bureau);
3) Will they service your loan throughout repayment, or will they sell your loan to a secondary market (don't shy away from a lender that doesn't service their own loans in repayment; you should be more concerned with a track record of multiple sales to another servicing agent);
4) Prior business dealings of family or friends on other consumer loans;
5) Ask about the lender's default rate as a reflection of loan servicing when loans enter repayment.
If your bank or credit union of choice does not participate in the Federal Family Education Loan Programs (Stafford, GRAD PLUS or Parent PLUS), you may wish to Click Here and review the information available on selecting a lender. If you scroll to nearly the bottom of the page and look for the headings, "Applying for a Stafford Loan" and "Other Student Loans", information to aid in selecting a lender is provided along with listings of participating national lenders.
You do not need to select a lender for Direct Loans. Loan funds through this program are disbursed directly from the Federal Government.
Feel free to contact our office if you have further questions.
For more information contact...
Financial Aid Office
SDSM&T
501 E Saint Joseph Street
Rapid City, SD 57701-3995
Work Phone 605-394-2274
FAX 605-394-1979
Toll Free 1-877-877-6044
financialaid@sdsmt.edu
Contact: SDSM&T Financial Aid
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| http://sdmines.sdsmt.edu/finaid/fed.loans |
Last Modified: 12/18/2009 |
