Educational Loan Programs

There are some fundamental differences between the federal loans and the loans available from private lenders. Below is a basic overview to help you begin to navigate your loan options.


FEDERAL PERKINS LOAN

The Federal Perkins Loan is a need-based, low interest (5%) fixed rate loan. The standard repayment period is 10 years. There are no processing fees. Funds are limited; levels are based on repayments from previous borrowers. No interest accrues and no repayment is expected while a student is enrolled in an institution of higher education at least half-time and for nine months thereafter.

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FEDERAL DIRECT LOAN

Through the Federal Direct Lending Program, borrowers receive federal loan funds directly from the U.S. Department of Education. There are two types of Federal Direct Loans:

Subsidized: The federal government pays the interest on this loan while the student is enrolled at least half-time or during times of authorized deferment. Direct Subsidized Loans are awarded based on federal financial need and grade level.
NEW—effective for subsidized loans disbursed on or after July 1, 2012 and before July 1, 2014: the government will no longer pay the interest during the six month grace period.

Unsubsidized: Students are responsible for paying the interest that accumulates after the loan has disbursed. The interest can be paid while in school or the accrued interest will be capitalized (added to the principal balance). Unsubsidized Stafford Loans are awarded based on grade level, and financial need is not considered.

  • Effective on July 1, 2013 the interest rate for both Subsidized and Unsubsidized loans is fixed at 3.86%.
  • Graduate students: Effective July 1, 2012 there is no longer Subsidized loans available for graduate students.
  • A fee of 1.051% is deducted from the loan amount at every disbursement.
  • Repayment begins six months from the date of graduation, full withdrawal or enrollment less than half-time.
  • There is no pre-payment penalty.

New Direct loan Borrowers at Champlain College must complete a Master Promissory Note (MPN) and Entrance Counseling  online at www.studentloans.gov.

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FEDERAL DIRECT PARENT PLUS LOAN

The Federal Direct Parent PLUS Loan Program provides a borrowing option for parents of dependent undergraduate students to help finance their student's education. The maximum amount a parent can borrow is the cost of attendance less other sources of financial aid. The student's award letter will indicate the maximum amount eligible. This amount can be reduced or declined; no parent is required to borrow a Federal Direct PLUS Loan.

The funds are borrowed directly from the U.S. Department of Education. This is a credit-based loan. The interest rate is fixed at 6.41%, and there is a 4.204% fee deducted from every disbursement. Interest accrues from the first date of disbursement. Repayment begins after the loan is fully disbursed; however, deferment options are available to delay repayment. There is no pre-payment penalty.

To borrow through the Federal Direct PLUS Loan program the parent must pass a credit check, which is valid for 90 days. Parents without adverse credit will be approved for the loan. Adverse credit is defined by regulation as: 90 days or more delinquent on any debt or having a credit report that shows a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Title IV debt, during the five years preceding the date of the credit report. Parents denied a Federal Direct PLUS Loan will be offered the option to appeal or apply with a credit-approved endorser.

Parents intending to borrow a PLUS Loan will need to complete a  Master Promissory Note (MPN) and PLUS Application online at www.studentloans.gov. In subsequent years, only the PLUS Application will need to be completed. The MPN is valid for 10 years after a loan has been issued from it.

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FEDERAL DIRECT GRADUATE  PLUS LOAN

The Federal Direct Graduate PLUS Loan Program provides a borrowing option for graduate students to help finance their education. The maximum amount a graduate student can borrow is the cost of attendance less other sources of financial aid. The graduate student's award letter will indicate the maximum amount eligible. This amount can be reduced or declined; no student is required to borrow a Federal Direct Graduate PLUS Loan.

The funds are borrowed directly from the U.S. Department of Education. This is a credit-based loan. The interest rate is fixed at 6.41%, and there is a 4.204% fee deducted from every disbursement. Interest accrues from the first date of disbursement. Repayment begins after the loan is fully disbursed; however, deferment options are available to delay repayment. There is no pre-payment penalty.

To borrow through the Federal Direct Graduate PLUS Loan program the student must pass a credit check, which is valid for 90 days. Students without adverse credit will be approved for the loan. Adverse credit is defined by regulation as: 90 days or more delinquent on any debt or having a credit report that shows a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Title IV debt, during the five years preceding the date of the credit report. Students denied a Federal Direct Graduate PLUS Loan will be offered the option to appeal or apply with a credit-approved endorser.

Students intending to borrow a Graduate PLUS Loan will need to complete a Master Promissory Note (MPN) and Graduate PLUS Application online at www.studentloans.gov. In subsequent years, only the Graduate PLUS Application will need to be completed. The MPN is valid for 10 years after a loan has been issued from it.

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PRIVATE EDUCATION LOANS

Private loans are non-federal, credit-based education loans, borrowed from a private lending institution that must be repaid. The loans are typically issued in the student's name with a required co-signer. The maximum amount a student may borrow is the cost of attendance minus any other financial aid or the maximum limit established by the lender. Families are encouraged to fully explore federal loan options, (e.g. Perkins, Direct Subsidized, Direct Unsubsidized and Direct PLUS Loans), before securing a private loan due to the benefits and consistencies that the federal loan programs provide. Funds are posted to the student's account each semester following enrollment verification, which generally occurs after the second week of the semester.

Selecting a private education loan and lender is a personal decision. The Office of Financial Aid strongly recommends researching private education loans and lenders before completing a loan application online or signing any loan paperwork. Research should include: a comparison of interest rates, fees, repayment terms,and the level of customer service provided by the lender.

Comparison chart for Direct PLUS and Private Educational Loan

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