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 “Extenuating 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. Nelnet will bill you monthly and forward your payment to Anderson University. Contact Nelnet directly at (800) 609-8056 or online.

A PLUS Loan (Parent Loan for Undergraduate Students) is a federally sponsored loan that your parents receive. The amount of their eligibility for the PLUS Loan will show on your 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 below. A couple of things to consider:

  • It is your parents’ loan, not yours. They are the ones legally responsible to repay the loan.
  • The current interest rate is set by the federal government and is currently a fixed rate of 7 %.
  • Payments are not automatically deferred while you are in school like your student loans, but the loan can be deferred upon request. Interest continues to accrue, however.
  • Fees, currently 4.276%, are deducted from the amount borrowed.
  • If your parents are denied the PLUS Loan (it does not take excellent credit to be approved, just the absence of “adverse credit”), then you automatically become eligible for an additional $4,000-$5,000 in the Federal Direct Unsubsidized Loan, depending on your grade level. If you need to borrow more than this additional amount, talk with your counselor to review additional options that are more specific to your situation.

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 less costly options or part-time employment first, and then borrow only the amount that you absolutely need.
  • It is unlikely that you will qualify for a private student loan in your name only, as approval is based solely on credit. Therefore one of your parents (or someone else) will have to serve as a co-signer on the loan. Interest rates are not usually fixed and will vary based on your credit score and market conditions.

Extenuating circumstance
We understand that there are many situations that may affect your family’s ability to pay for your college education. The more common ones are loss of or change in income, divorce, separation, death of a parent, or high medical expenses. If you fit one of these, request a review of your financial aid by going to our website and selecting “Request a Review.” Otherwise, call your counselor and talk over your situation. While you will have to provide us with appropriate documentation, there is a good chance we will be able to review your financial aid request 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 Unsubsidized Loan. (See below).
  • FAFSA required annually. Student must be enrolled in at least 6 credit hours (half time) to borrow federal loans.
  • Repayment of principle and interest beginning 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 on or after July 1, 2017 is fixed at 4.45%.
  • Must maintain satisfactory academic progress.
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.
  • Graduate loan limits (when combined with Subsidized loan): $20,500 per year; Cumulative limit – $138,500 when combined with subsidized loan.
  • 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 on or after July 1, 2017 is fixed at 4.45%.
  • Repayment of principle and interest beginning six months after ceasing to be enrolled at least half-time.
  • FAFSA required annually
  • Must maintain satisfactory academic progress

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.
  • The interest rate for Graduate Unsubsidized loans disbursed on or after October 1, 2015, is fixed at 5.84%.
  • Repayment of principle and interest beginning six months after ceasing to be enrolled at least half-time.
  • FAFSA required annually
  • Must maintain satisfactory academic progress

Eligibility
Your financial aid award letter will state your eligibility for the Unsubsidized Direct Loan.

Processing Your Loan

Federal Direct Grad PLUS Loan
  • 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)
  • Interest rate is fixed at 6.84%
  • Repayment begins once the loan if fully disbursed

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

Processing Your Loan

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 U.S. Department of Education
  • The interest rate for Parent PLUS loans disbursed after July 1, 2015 and before July 1, 2016 is fixed at 6.84%
  • Loans fees for Parent PLUS loans disbursed after Oct. 1, 2015 and before Oct. 1, 2016 are 4.272% and are proportionately deducted from each loan disbursement .
How to Apply for the Parent Federal Direct PLUS Loan

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

Note: If more than one parent, including the step-parent, is borrowing then each parent or step-parent must complete the required steps for their own loan request.

  1. Request a Direct PLUS Loan
    • 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.
    • Direct PLUS Loan requests collect parent information that will be used by the school to process the application.
    • PLUS loan borrowers will be subject to a credit check by the U.S. Department of Education.
  2. Sign a Master Promissory Note
    • Parent borrowers must complete an MPN for each student using their own (parent) Federal Student Aid I D or FSA ID. Apply for an FSA ID at fsaid.ed.gov .
    • 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.
  3. Create a Federal Student Aid ID
  4. Deferment while in school
    • The Federal Direct PLUS Loan enters repayment once the loan is fully disbursed (paid out) to the school. For example, if the loan covers both fall and spring semesters, once the spring portion disburses in January, repayment begins in February.
    • Parents must contact the Loan Servicer to request a deferment. Once Parent PLUS borrowers are notified of the first payment due, they may respond by requesting an in-school deferment
      • while you or your child are enrolled as a student at least half-time and
      • for an additional six months after your child ceases to be enrolled at least half-time.
    • Requests for PLUS loan deferments must be made annually as long as the child remains a full-time student.

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

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 PLUS loans are borrowed by the parent(s) on behalf of the student.

STUDENTS – Federal Direct Subsidized and Unsubsidized Loans

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

  1. Complete online Entrance Counseling. Entrance counseling is an interactive 30-minute session that the student borrower must complete.
    • The U.S. Department of Education requires that every student complete 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.
    • Transfer students must update an existing MPN with the appropriate school code.
    • 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 the students’ rights and responsibilities as first-time borrowers.
    • Student borrowers must complete an MPN using their own Federal Student Aid 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.