Should I seriously consider a federal student loan?

Yes, but understand that you are taking out a loan that will need to be repaid. But if you take the approach that borrowing a student loan is an investment in your education that will pay you big dividends (college grads often make $1 million more over their lifetime than non-college grads) and you borrow only the amount you need, loans can work for you.

If my financial aid does not cover all of what what I will need, what other options can I consider?

Assuming your family doesn’t have any circumstances that are impacting their ability to help pay for college (if so, see “Special Circumstances” below), then we would suggest you consider the following:

Payment Plans exempt borrowers from the monthly finance charge of 1.5% and may result in smaller loans. If your parents feel they can make some level of monthly payment (even if it is not the entire amount due), they should consider enrolling in a payment plan. It is always better to pay as you go rather than borrowing funds, even if they are available. AU’s payment plan is administered through a company called Nelnet and usually requires four or five payments per semester. We are notified when you enroll, and the amount you set up under a payment plan will be reflected on your monthly student bill. These plans are interest-free, but there is a semester enrollment fee. These plans are interest-free, but there is a semester enrollment fee.

A PLUS Loan (Parent Loan for Undergraduate Students) is a federally sponsored loan that your parent/stepparent can request for their child’s college education. The amount of their eligibility for the PLUS Loan will show on the student’s award letter. This is not the amount we are suggesting they borrow; it is the maximum amount they can borrow. Your parents can request a PLUS loan online through the U.S. Department of Education (studentloans.gov).

Private Student Loans. The good and bad news is that there are many organizations willing to lend you money for college. Here are a couple of things you should know about private loans:

  • Consider other options, scholarships, or part-time employment first, and borrow only the amount you need.
  • College students often do not have credit established and approval on a private student loan is based solely on credit, therefore the need for a co-signer is likely. Interest rates and loan terms will vary by lender, credit score, and market conditions.

Special circumstance

We understand there are many situations that may affect a family’s ability to pay for college. The more common ones are loss or change in income, divorce, separation, death of a parent, or high medical expenses. If you believe you may have an extenuating circumstance, you may request a review of your financial aid. Otherwise, call your financial aid counselor and talk over your situation. While you will be required to provide appropriate documentation, there is a good chance we will be able to review your financial aid based on your special circumstance.

Undergraduate Loans

Federal Direct Subsidized Loan
  • Undergraduate loan limits: Freshman – $3,500; Sophomore – $4,500; Junior and Senior – $5,500; Cumulative limit – $23,000
  • Loans are need-based, but if it is determined that there is no need, a student can borrow an Unsubsidized Loan (see below).
  • FAFSA is required annually.
  • Students must be enrolled in at least six credit hours (half-time) to borrow federal loans.
  • Repayment of principle and interest will begin six months after ceasing to be enrolled at least half-time.
  • The federal government will pay the interest while you are a student.
  • The interest rate for Subsidized Loans disbursed between 7/1/2018 and 7/1/2019 is fixed at 5.05%.
  • The federal government will deduct an origination (processing) fee from the amount you borrow. The rate for loans disbursed between 10/1/2018 and 9/30/2019 is 1.062%.
  • Students must maintain satisfactory academic progress to remain eligible.
Federal Direct Unsubsidized Loan
  • Undergraduate loan limits (when combined with Subsidized Loan): Freshman – $5,500; Sophomore – $6,500; Junior and Senior – $7,500; Cumulative limit – $31,000 when combined with Subsidized Loan.
  • Independent undergraduate loan limits (in addition to regular undergraduate loan limits): Freshman and Sophomore – $4,000; Junior and Senior – $5,000; Cumulative limit – $57,500 when combined with Subsidized Loan.
  • FAFSA is required annually.
  • Students must be enrolled in at least six credit hours (half-time) to borrow federal loans.
  • Repayment of principle and interest will begin six months after ceasing to be enrolled at least half-time.
  • The federal government will NOT pay the interest while you are a student. However, you do have the option of making interest-only payments while you are in school, or waiting until repayment begins on the principal six months after ceasing to be enrolled at least half-time.
  • The interest rate for undergraduate Unsubsidized Loans disbursed between 7/1/2018 and 7/1/2019 is fixed at 5.05%.
  • The federal government will deduct an origination (processing) fee from the amount you borrow. The rate for loans disbursed between 10/1/2018 and 9/30/2019 is 1.062%.
  • Students must maintain satisfactory academic progress to remain eligible.

Graduate Loans

Federal Direct Unsubsidized Loan
  • Graduate loan limits (when combined with undergraduate Subsidized and Unsubsidized Loans) are $20,500 per loan period. A loan period covers two terms and could be either summer/fall, fall/spring, or spring/summer.
  • Cumulative graduate loan limits are $138,500 (when combined with undergraduate loans).
  • The federal government will NOT pay the interest while you are a student. However, you do have the option of making interest-only payments while you are in school, or waiting until repayment begins on the principal six months after ceasing to be enrolled at least half-time (“half-time” varies by program).
  • The interest rate for graduate Unsubsidized Loans disbursed between 7/1/2018 and 7/1/2019 is fixed at 6.6%.
  • The federal government will deduct an origination (processing) fee from the amount you borrow. The rate for loans disbursed between 10/1/2018 and 9/30/2019 is 1.062%.
  • Repayment of principle and interest will begin six months after ceasing to be enrolled at least half-time (varies by program).
  • FAFSA is required annually.
  • Students must maintain satisfactory academic progress to remain eligible.

Eligibility

In order to have federal loan eligibility, students must file a Free Application for Federal Student Aid (FAFSA) for the relevant academic year. Anderson University notifies students of their direct loan eligibility in the financial aid award letter.

First-time Borrowers

Federal Direct Grad PLUS Loan

Graduate students enrolled at least half-time can borrow an amount equal to the cost of education less other financial aid.

  • Available to credit-worthy graduate students.
  • Students must first apply for and receive maximum eligibility under the Federal Direct Loan Program (see above).
  • Eligibility is limited to educational costs minus financial aid (including Direct Unsubsidized Loans).
  • The interest rate for Direct Graduate PLUS Loans disbursed between 7/1/2018 and 7/1/2019 is fixed at 7.6%.
  • The federal government will deduct an origination (processing) fee from the amount you borrow. The rate for loans disbursed between 10/1/2018 and 9/30/2019 is 4.248%.
  • Repayment will begin six months after ceasing to be enrolled at least half-time (varies by program).
  • Complete and submit online the Direct PLUS Loan Application.
  • Complete the online Entrance Loan Counseling (ELC), an interactive session offering important information about your student loan, required of all Grad PLUS borrowers.
  • Complete online your Master Promissory Note (MPN).

Parent Loans

Federal Direct PLUS Loan for Parents
  • Available to credit-worthy parents of dependent students.
  • Eligibility is limited to educational costs minus financial aid.
  • Repayment begins within 60 days of full disbursement.
  • Deferments are available upon request to the U.S. Department of Education.
  • The interest rate for Parent PLUS Loans disbursed between 7/1/2018 and 7/1/2019 is fixed at 7.6%.
  • The federal government will deduct an origination (processing) fee from the amount borrowed. The rate for loans disbursed between 10/1/2018 and 9/30/2019 is 4.248%.
How to Apply for the Parent Federal Direct PLUS Loan

First-time borrowers: Complete steps 1 and 2.
Repeat borrowers: Complete step 1 only.

Borrowers must log in with their Federal Student Aid ID (FSA (ID).

Note: If more than one parent/stepparent is borrowing, each must complete the required steps for their own loan.

  1. Request a Direct PLUS Loan from the U.S. Department of Education.
    • The parent indicates the amount he/she wants to borrow (for the current school year) based on the student’s eligibility as indicated in the financial aid award letter.
  2. Sign a Master Promissory Note
    • Parent borrowers must complete an MPN for each student using their own (parent) FSA ID.
    • The Direct PLUS Loan MPN constitutes the parent’s legally binding agreement to repay all Direct PLUS Loans that the student receives.
    • The Direct PLUS Loan MPN explains all of the terms and conditions of Direct PLUS Loans.

Deferment

Parent borrowers are generally expected to enter repayment for a Federal Direct Parent PLUS Loan once the loan is fully disbursed (paid out) to the school. For example, if the loan covers both fall and spring semesters, repayment would begin once the spring portion disburses. However, you may contact the loan servicer to request a deferment for up to six months after your child ceases to be enrolled at least half-time. You don’t have to make any payments while your loan is deferred.

  • You have the option of requesting deferment as part of the loan request process.
  • You can also contact the loan servicer to request a deferment.
  • Interest will continue to accrue during deferment.
  • Your loan servicer will notify you when your first payment is due.

In the Event of a Denied Request

If a parent borrower’s request for a Federal Direct Parent PLUS Loan is denied, the student will automatically become eligible for an additional $4,000-$5,000 in a Federal Direct Unsubsidized Loan, depending on grade level. If more is needed than this additional amount, speak with your financial aid counselor for additional options specific to your situation.

Try This Resource

Federal Student Loans: Direct PLUS Loan Basics for Parents provides parents with information on Direct PLUS Loans for parents, including an overview of eligibility, application process, and repayment.

Private Loan Information

Private Educational Loans
  • Credit-based, non-federal loan offered by banks and other lenders.
  • Usually limited to your educational costs minus financial aid.
  • Deferral of principal and interest while attending school at least half-time may be possible. Interest not paid while in school is added (capitalized) to your loan balance.
  • Variable interest rate and fees based on your credit and that of a co-borrower, if applicable.
  • Because approval is based on your credit, most students will need a credit-worthy co-borrower.
  • Repayment terms and options, including co-signer release, vary by lender.
Eligibility

Anderson University strongly encourages you to exhaust all federal grant and loan options prior to applying for a Private Educational Loan by completing the FAFSA.

Private loans are those defined as loans that come from a bank, credit union, or other nongovernmental sources. A private educational loan is a student loan but usually requires a creditworthy co-signer (usually the parent).

Anderson University will process loans from any lender you choose. These links offer links to lenders our students have used in the past.

These loans are not regulated by the federal government and have adjustable interest rates. The terms of the loans will vary from lender to lender, and the interest rate may be significantly higher than that of Federal Direct Loans (Student, Parent PLUS, and Graduate PLUS).

Anderson University does not promote specific lenders. You should thoroughly research all options before making your decision.

Due to requirements in the Truth in Lending Act, a lender must obtain a self-certification signed by the applicant before disbursing a private education loan. If you have not provided a signed copy of the applicant self-certification form [PDF] to your lender, download it now.

Apply for Direct Loans

Details

In order to have federal loan eligibility, students must file a Free Application for Federal Student Aid (FAFSA) for the relevant academic year. Anderson University notifies students of their direct loan eligibility in the financial aid award letter.

  • Federal Direct Subsidized and Unsubsidized Loans are borrowed by the student.
  • Federal Direct Parent PLUS Loans are borrowed by a parent on behalf of the student.
  • Federal Direct Graduate PLUS Loans are borrowed by a student in a graduate degree program.

How to Accept, Reduce, or Decline Your Federal Loan Eligibility

Each year, we require students to accept, reduce, or decline their federal loan eligibility. Students can do this by logging into AccessAU.

  • Navigate to the Student Center (Self Service>Student Center)
  • Click the link to ‘Accept/Decline Awards’ in the Finances section
  • Click the appropriate award year
  • Check the box to either accept or decline your subsidized and/or unsubsidized loan(s).
    • If you wish to reduce the amount, click accept and then edit the figure (see note).
    • After making the appropriate selections, click submit.

Note: The Department of Education will take a 1.062% processing fee from the total amount that disburses between 10/1/2018 and 9/30/2019. If you wish to include the loan fees in the amount that you borrow, you will want to add 1.062%. For example, if you are eligible to borrow $5,500, but only need $2,000 to cover your balance, and you want to cover loan fees, the amount to reduce the loan to is $2,021 ($2,000 x .01062 = $21, so $2,000 + $21 = $2,021).

STUDENTS – Federal Direct Subsidized and Unsubsidized Loans

First-time student borrowers must complete two steps at studentloans.gov to receive direct loan funds.

  1. Complete online Entrance Counseling (ELC), an interactive session that the student borrower must complete.
    • The U.S. Department of Education requires that every student completes Entrance Counseling the first time they borrow a Federal Direct Loan.
    • If students who previously borrowed transfer from one University to another, Entrance Counseling does not need to be repeated. Likewise, graduate students who previously borrowed direct loans as undergraduates do not need to repeat Entrance Counseling.
  2. Sign a Master Promissory Note (MPN). The MPN must be completed one time and is valid for up to 10 years.
    • The MPN is a legal document in which students promise to repay their loan(s) and any accrued interest and fees to the U.S. Department of Education.
    • The MPN explains student rights and responsibilities as a first-time borrower.
    • Student borrowers must complete the MPN using their own Federal Student Aid ID (FSA ID).

Q & A: Federal Direct Loans

What are Direct Loans?

Beginning July 1, 2010 all colleges and universities must use the William D. Ford Federal Direct Loan Program for new federal loans, commonly referred to as Direct Loans. Under the Direct Loan Program the federal government will serve as your lender.

What must a graduate student do to apply for a Direct Grad PLUS Loan?

Grad PLUS loan borrowers will be subject to a credit check by the U.S. Department of Education.

Graduate students indicate the amount they want to borrow (for the current school year) based on their eligibility as indicated by their SFS counselor.

To receive the funds you must complete a Master Promissory Note (MPN) at www.studentloans.gov.

Log in using the same FSA ID which was used to complete the Free Application for Federal Student Aid (FAFSA).

The MPN is a legal document in which the student promises to repay the loan and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of the loan. Once the MPN has been completed the school will be informed electronically.

  1. Request your loan online.
  2. Complete and sign a Master Promissory Note (MPN) online.
What if I have lost or forgotten my ID/PIN or I need to apply for one?

Loan Repayment

Things You Should Know About Student Loans

GRACE PERIOD
Student borrowers have a six-month grace period between when they leave school and when they are required to start paying back student loans. The grace period is intended to help students adjust to life beyond school and figure out their finances before they begin making payments.

EARLY PAYMENTS
Students are not required to make payments during their grace period, however they have the option to pay down student loans while in school or during the grace period. To begin paying early students make payments directly to the company that services their loan. Each servicer has its own payment process.

NSLDS
The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s central database for student aid. Students gain access to their individual loan information by logging into www.nslds.ed.gov with their FAFSA PIN. You can find out which company services your loan by visiting nslds.ed.gov.

DEVELOP YOUR REPAYMENT STRATEGY BEFORE GRADUATION

Post-Graduation Loan Repayment Options 

  • Know Your Loan Servicer
  • Set up an online account while you’re in school
  • Make payments while in school (even if it’s only a little)
  • You will have repayment options [PDF]
  • Keep in Touch!

Refinance Loans

Consolidation of both federal and private loans. Available to both Student borrowers and also Parent PLUS borrowers.

Private Loan Consolidation

For private loans only. Learn more on a lender comparison tool provided by Student Loan Hero.