Loan Programs
All of the following programs allow for early prepayment of principal without penalty.
Federal Perkins Loan
This low-interest federal loan is offered through Wheaton to students with significant financial need. No interest is charged and no payments are required until nine months after the student leaves school. Once repayment begins, interest accrues at 5 percent. The minimum monthly payment is $40 with a maximum 10-year repayment. This loan may be deferred if the student attends graduate school full time. Wheaton determines the size of a student's Perkins Loan based on available funding; awards range from $500 to $4,000 per year. The student signs a master promissory note and completes entrance counseling prior to the first disbursement of the loan.
Federal Subsidized Stafford Student Loan
This is a federally subsidized student loan available from banks and other lenders. Stafford loans borrowed after July 1, 2006 have a fixed interest rate of 6.8%, while loans borrowed prior to 7/1/2006 have a variable interest rate which is adjusted annually based on the 91 day Treasury Bill rate plus 1.70 percent, with a cap of 8.25 percent. The 2007-08 variable interest rate is 6.62% in-school and grace period, 7.22% in repayment. The minimum monthly payment is $50 and the maximum repayment period is 10 years. Our current Stafford loan recommended lenders are not charging a default or origination fee; other lenders may charge up to 2.5% in origination and default fees which are subtracted from the total amount borrowed prior to disbursement. Repayment of principal and interest begins six months after the student leaves school, graduates, or drops below half-time attendance. Repayment may be deferred if the student goes on to full-time graduate school. Maximum eligibility for freshmen is $3,500, sophomores, $4,500, and juniors and seniors, $5,500.
Federal Unsubsidized Stafford Loan
Students who are not eligible for the Subsidized Stafford Loan program may still be eligible to borrow a Stafford loan without the federal interest subsidy. Although repayment of principal is deferred during enrollment, interest does accrue. The student borrower has the option of making interest payments while in school, or having the accrued interest capitalized (added to the principal borrowed prior to the start of repayment.) Freshmen may borrow up to $3,500 for the year, sophomores up to $4,500, and juniors and seniors up to $5,500 per year. Interest accrues at an annually variable rate determined annually, with a cap of 8.25%. The current rate for 2007-08 is 6.62% in-school and grace period, 7.22% in repayment. Our current Stafford loan recommended lenders are not charging a default or origination fee; other lenders may charge up to 2.5% in origination and default fees which are subtracted from the total amount borrowed prior to disbursement. Repayment of principal and interest begins six months after the student leaves school, graduates, or drops below half-time attendance. Repayment requires a minimum payment of at least $50 and extends for up to 10 years. Students who wish to apply for the Unsubsidized Stafford Loan must complete the Free Application for Federal Student Aid (FAFSA.
Federal PLUS Loan
The Federal Parent Loan for Undergraduate Students (PLUS) program enables parents to borrow for higher education expenses through participating banks or other lenders. PLUS loans borrowed on or after July 1, 2006 have a fixed interest rate of 6.8%, while loans borrowed prior to July 1, 2006 have a variable interest rate which is adjusted annually and capped at 9%. The current variable rate for 2007-08 is 8.02%. Repayment of principal and interest begins after disbursement and continues for a maximum of 10 years. Eligibility for the PLUS loan is determined by the total cost of attendance less any other aid received. The Federal PLUS loan is the most flexible of these parent-financing options. Lenders are required to perform a brief credit check, for evidence of an adverse credit history. In the case where the parent is denied a PLUS loan due to adverse credit history, the student may qualify for additional funds from the Unsubsidized Federal Stafford Loan program. A 3%-4%origination fee is deducted from the total amount borrowed prior to disbursement. For more information regarding the Federal Plus Loan Program, click on the Federal PLUS loan link above. For a list of recommended lenders, click here. To initiate a loan application, please contact American Student Assistance, at 1(800)999-9080 or online at www.amsa.com.
MEFA Loan
The MEFA Loan program is a series of low cost financing options offered by the Massachusetts Education Financing Authority (MEFA). The MEFA Loan allows creditworthy parents, with the student as a co-signer, to finance up to 100% of the cost of education (less any other financial aid received), with a minimum loan amount of $2,000. Borrowers do not need to live in Massachusetts as long as the student is attending a participating college or university in the state. Families may choose either a fixed rate or variable rate loan.
Fixed-Rate Option: The interest rate on the fixed rate option for 2007-2008 is 6.39% (6.71% APR).
The fixed rate loan includes a home equity option, which may allow for the interest paid to be deductible for federal tax purposes. If you are interested in this option, MEFA has set up a special number that you may call to speak with a home equity option specialist: 1-800-842-1831.
Variable-Rate Option: This rate is adjusted quarterly. As of July 1, 2007, the variable rate is 7.56% (7.89% APR).
MEFA loans have a 20 year repayment term. Repayment begins 45 days after the loan is fully disbursed. With either rate option, the loan may be prepaid without penalty at any time. For more inforamtion please contact MEFA at (800) 449-6332 or online at www.mefa.org.