Understanding loans
Loans require repayment and are the only form of financial aid that must be repaid. They can be an excellent low-interest source of paying college expenses; however, it is important to be a responsible borrower—borrow only what you need to cover educational expenses, not the maximum. Federal loans have fixed interest rates, do not require a credit evaluation and, in most cases, do not have to be repaid until after you graduate, withdraw or otherwise cease half-time enrollment.
Federal loans
Federal Subsidized Direct Loan is a repayable loan awarded on the basis of financial need. The Federal government pays any accrued interest on the loan while the student is enrolled in school, during the grace period or during authorized periods of deferment. The current interest rate on subsidized loans can be found at studentaid.gov. Undergraduate students may borrow annually a combination of subsidized and unsubsidized loans not to exceed $3,500 as a freshman; $4,500 as a sophomore; $5,500 as a junior or senior. Effective 7/1/2012, graduate students are no longer eligible for subsidized loans.
Federal Unsubsidized Direct Loan is not awarded on the basis of financial need. Any student regardless of income may participate in this loan program. However, interest does accrue from the date of disbursement until the loan is paid in full. The current interest rate on unsubsidized loans can be found at studentaid.gov, for both undergraduate and graduate students. The borrower has the options of paying the accrued interest or having the interest capitalized. Undergraduate students may borrow annually a combination of subsidized and unsubsidized loans not to exceed $3,500 as a freshman; $4,500 as a sophomore; and $5,500 as a junior or senior. Graduate students may borrow $20,500 annually.
Federal Direct Parent Loan for Undergraduate Students (PLUS) is available to the parents of a dependent student to defray remaining educational expenses after all other financial aid resources are exhausted. Eligible applicants may borrow up to the cost of attendance less other financial aid. The current interest rate can be found at studentaid.gov, as well as the interest rate maximum. Unlike the Federal Stafford Loan program, PLUS borrowers must be credit worthy to qualify for this loan and repayment begins within 60 days of the loan disbursement. Parents can apply online at studentaid.gov.
Federal Direct Graduate PLUS Loan is available for graduate students who need to borrow funds beyond the federal direct subsidized and unsubsidized loan limits. The current interest rate for a Graduate PLUS Loan can be found at studentaid.gov, as well as its origination fee, which will be deducted at disbursement. No annual or aggregate borrowing limits are imposed, other than cost of attendance less other financial aid received.
Private/alternative educational loans
Private (Alternative) Loans are non-federal educational loans through private lenders. Unlike Federal Direct Loans, private alternative loans require the applicant be credit-worthy or have a credit-worthy cosignor. We advise that this loan option be used as a last resort after all federal loan options, including a Parent PLUS Loan of a dependent student, have been exhausted. The interest rate, repayment fees and terms are more favorable under the Federal Direct Loans. If after exploring all financial aid options you find that you must apply for a private alternative loan, research different lenders before selecting one. We recommend that you compare the lenders’ loan products, interest rates and repayment plans before applying for a private alternative loan.
LaGrange College does not endorse or promote any lenders that offer private alternative loans. However, we provide a Private Educational Loan List of lenders from whom our students have borrowed over the past five years as a courtesy. This list is not intended to endorse any one lender or to serve as a preferred lender list. Contact Financial Aid for a copy.
Student Access Loan (SAL) is a need-based, State of Georgia, low-interest loan program that assists undergraduate Georgia residents who are U.S. citizens or eligible non-citizens in meeting the gap in their educational costs. Funding in this program is limited, and applications are selected through a lottery after the application period expires. Selected applicants may borrow up to $8,000 annually. Not all selected students will qualify. The Financial Aid Office will submit information to the state regarding the selected student’s SAI (formerly known as EFC) and financial aid award to determine eligibility. Interest rates range from 1% to 8% depending on the length of time it takes the applicant to complete his/her degree program. For more information on the Student Access Loan, please visit gafutures.org.