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Education loans


VSAC offers a fixed-rate private education loan for the 2013-2014 academic year: The Vermont Advantage

A private education loan can help make up the difference between your total cost of education and the various kinds of financial aid you have received.

Students should always start with the federal Stafford loan, and use a private student loan only after reaching the maximum in federal Stafford funding. Contact your school’s financial aid office if you haven’t already applied for a federal Stafford loan.

Check out VSAC’s no-nonsense guide to education loans available online as a PDF or e-book.


Know Your Federal and Private Education Loan Options


Federal education loans (loans from or guaranteed by the federal government) are often your next best option if grants and scholarships do not cover the entire cost of college.

To apply for any federal loan, first fill out the Free Application for Federal Student Aid (FAFSA).

Based on your FAFSA information, the financial aid office at your school will create an aid package for you that may include one or a combination of:

Federal Perkins loan for students

Perkins loans:

  • are awarded to undergraduate, graduate, or professional degree students who demonstrate exceptional financial need
  • are awarded to both full-time and part-time students
  • are available only at participating schools
  • must be repaid by students to their schools

The current fixed interest rate on all Perkins loans is 5%.

The financial aid office at your school will determine whether or not you are eligible for a Perkins loan, based on the information reported on your FAFSA. Your school may or may not take into consideration other factors not included on the FAFSA.

If you are eligible, the financial aid office will include a Perkins loan in your financial aid award notification.

Federal Stafford loans for students

Stafford loans are provided directly from the federal government for:

  • undergraduate, graduate, or professional degree students
  • students enrolled at least half time

The financial aid office at your school will determine whether or not you are eligible for a Stafford loan, based on the information reported on your FAFSA. Your school may or may not take into consideration other factors not included on the FAFSA.

If you are eligible, the financial aid office will include a Stafford loan in your financial aid award notification.

Know the difference between subsidized and unsubsidized Stafford loans.


Subsidized Stafford loans

The U.S. Department of Education will pay the interest:

  • while you’re in school at least half time
  • during any periods of deferment

To obtain a subsidized Stafford loan, you must demonstrate financial need.


Unsubsidized Stafford loans

The U.S. Department of Education does not pay the interest for you. Unpaid interest is added to the principal balance after the six-month grace period. If you make interest payments while you’re in school, or before the end of your grace period, your loan debt will be lower upon entering repayment.

Students do not need to demonstrate financial need to obtain an unsubsidized Stafford loan.

Learn more about how interest works.


2013-2014 Stafford interest rates for undergraduate students


UNDERGRADUATE STUDENTS

Subsidized and unsubsidized Stafford loans

  • 3.86% fixed interest rate for loans taken out between July 1, 2013, and June 30, 2014
  • 1.051% loan fee for loans with a first disbursement between July 1, 2013, and November 30, 2013
  • 1.072% loan fee for loans with a first disbursement between December 1, 2013, and June 30, 2014

Apply through the financial aid office at your school.


2013-2014 Stafford interest rates for graduate/professional students


GRADUATE STUDENTS

Please note: For loan periods beginning on or after July 1, 2012, subsidized Stafford loans are no longer available for graduate students.

Unsubsidized Stafford loans

  • 5.41% fixed interest rate for loans taken out between July 1, 2013, and June 30, 2014
  • 1.051% loan fee for loans with a first disbursement between July 1, 2013, and November 30, 2013
  • 1.072% loan fee for loans with a first disbursement between December 1, 2013, and June 30, 2014

Apply through the financial aid office at your school.


Stafford loan limits


Schools will set both your subsidized and unsubsidized loan amounts, up to the following limits:

ANNUALDependent studentIndependent student or dependent student whose parent is ineligible for PLUS
First year$5,500$9,500
(up to $3,500 may be in subsidized loans)
Second year$6,500$10,500
(up to $4,500 may be in subsidized loans)
Remaining years$7,500$12,500
(up to $5,500 may be in subsidized loans)

CUMULATIVE

$31,000 dependent undergraduate
$57,500 independent undergraduate or dependent student whose parent is ineligible for PLUS

Federal PLUS loans for parents and for graduate/professional students

PLUS loans can be used to make up the difference between the total cost of college and the various kinds of financial aid you receive.

These loans are provided directly from the federal government.

Eligibility for the PLUS loan depends on a credit check.

If you are eligible, you can apply for a PLUS loan through the financial aid office at your school. Some schools will include a PLUS loan in their financial aid award notifications; others will not.

  • Parent PLUS loans enable parents to borrow to help pay education costs for a dependent student enrolled in an undergraduate degree program.
  • Graduate PLUS loans are available for graduate and professional degree students.

Before a family borrows PLUS loans or considers private loans, the student should always borrow the maximum in federal Perkins (if offered by the schools you apply to) and Stafford loans.

PLUS interest rates for parents or graduate/professional students


Parent and Graduate PLUS loans

  • 6.41% fixed interest rate for loans taken out between July 1, 2013, and June 30, 2014
  • 4.204% loan fee for loans with a first disbursement between July 1, 2013, and November 30, 2013
  • 4.288% loan fee for loans with a first disbursement between December 1, 2013, and June 30, 2014

Apply through the financial aid office at your school.


Parents, think you may not qualify for a PLUS loan?


Apply anyway! If you are denied, your student can possibly receive an additional amount up to $5,000 in unsubsidized Stafford loans.

If this doesn’t cover the cost of education, have your student contact VSAC to discuss private loan options.

Private education loans may be an option if grants, scholarships, and federal loans don’t cover all education costs or if a student’s family does not qualify for a federal PLUS loan.
Learn more about private loans.


Students should exhaust their eligibility for federal Stafford loans before choosing private education loans.

Understanding fees, interest rate and repayment information.


Review all the loan terms carefully so you can avoid taking out a high-cost private loan.

Fees

  • Look for no or low origination fees. Some lenders discount fees, and some lenders may offer no fees on private loans, especially if you have a cosigner.
  • Look for a lender that does not charge additional fees when you enter repayment.

Interest rates

  • The variable rates of most private education loans may be higher than the fixed rates of federal education loans.
  • Do not apply for a loan without determining the complete range of possible interest rates. Few applicants receive the advertised “as low as" rate.

Repayment

  • The longer your repayment period, the more you will pay in interest over the life of the loan.
  • Also, private loans with variable rates will make you vulnerable to rate increases.

If you need a private education loan, VSAC offers a fixed-rate private education loan: The Vermont Advantage

Compare the Vermont Advantage and PLUS loans.

Attending college in 2013–2014 or future academic years? Sign up now for e-mail notification to start receiving information about VSAC private loan programs.

 



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