Loan Programs
All of the following programs allow for early prepayment of principal without penalty.
Federal Subsidized Stafford Student Loan
This is a federally subsidized student loan available from banks and other lenders. No interest is charged and no payments are required until six months after the student leaves school. At that time, interest begins to accrue at an annually fixed rate based on the 91 day Treasury Bill rate plus 1.70 percent, with a cap of 8.25 percent.The 2007-08 interest rate is 6.80% in-school and grace period, 6.80% in repayment. The minimum monthly payment is $50 and the maximum repayment period is 10 years. A 2.5%-4% origination fee may be deducted 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 $3500, sophomores, $4500, and juniors and seniors, $5500.
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 $3500 for the year, sophomores up to $4500, and juniors and seniors up to $5500 per year. Interest accrues at a fixed rate determined annually, with a cap of 6.80%. The current rate for 2007-08 is 6.80% in-school, grace period, and in repayment. A 2.5%-4% origination fee may be deducted 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 Applications are available from the Office of Student Financial Services.
Federal PLUS Loan
The Federal Parent Loan for Undergraduate Students (PLUS) program enables creditworthy parents to borrow through participating banks or other lenders. The interest rate is fixed, adjusted annually on July 1, with a cap of 9%. The current rate for 2007-08 is 8.50%. 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 now 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, please contact American Student Assistance, at 1(800)999-9080 or online at www.amsa.com.
MEFA Loan
The MEFA loan is a series of low cost financing options offered by Wheaton in conjunction with 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 $2000. Borrowers do not need to live in Massachusetts so 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% (6.67%-7.75%APR).
Variable-Rate Option: This rate is set annually. The 2007-2008 variable rate as of April 1, 2007 is 5.35% (5.5%-7.89%APR).
The fixed rate loan includes a home equity option, which allows 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: 1-800-842-6332. With either rate option, the loan may be prepaid without penalty in part at any time or in full on the first day of any month. Low-cost insurance may also be purchased to pay off the loan in the event of the borrower's death. MEFA also offers a free help line to assist families in making the correct decisions about college financing and educational loans. Please take advantage of this excellent service by calling 1-800-449-MEFA, or contacting MEFA staff through the Internet.