School: Student Loans

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Pursuing a college education is a great investment in your future. The time, money and effort you spend on your education will provide you with opportunities for expanded career choices and greater earning potential. Although financing your education may seem overwhelming at times, many types of financial aid are available.

Federal Student Loans

Due to a change in federal law, all Federal Stafford and PLUS loans issued on or after July 1, 2010, will be through the William D. Ford Federal Direct Loan Program (Direct Loan). This change will impact only new loans.

Direct Loan funds will be disbursed directly to your school from the federal government rather than through Shelby County State Bank or another Federal Family Education Loan Program (FFELP) servicer or lender.

Two types of Federal Stafford Loans are available: subsidized and unsubsidized. Subsidized Federal Stafford Loans are based on financial need. The federal government will pay the accrued interest on your loan during the time you are a student and up to six months after you graduate, withdraw or from school or drop to less than half-time enrollment. Unsubsidized Federal Stafford Loans are not based on financial need. You will be responsible for paying the interest that accrues while you are attending college. You will, however, have the option to either pay the interest while you are in school or to defer your interest payments and add it to the principal amount of your loan.

To learn more about Federal Stafford Loans, please visit the Federal Student Aid website at http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp

Parents can take out a Federal PLUS Loan to borrow funds on behalf of dependent, undergraduate students who are enrolled at least half time. Parents can learn about the Federal PLUS Loan at http://studentaid.ed.gov/PORTALSWebApp/students/english/parentloans.jsp

How to I apply for Financial Aid?

Most colleges require an application for admission before they will consider you for financial aid, so if you have not done that yet, do so now.

Once you’ve narrowed down your college choices, apply for financial aid as soon as possible after January 1 of the upcoming school year to ensure that you will meet the college’s priority deadline for various types of financial aid. You’ll need to complete the form with your parents and here are the steps you’ll need to take to apply for financial aid:

Apply for a personal identification number (PIN) at www.pin.ed.gov to make the financial aid process quicker.

Complete a FAFSFA (Free Application for Federal Student Aid) available from your high school counselor.

Within a month after completion and submission of the FAFSFA, you’ll receive a Student Aid Report letting you know how much you qualify for.

This Student Aid Report will be reported to the colleges that you list on your FAFSA. Those colleges will then use this information to calculate your Financial Need and eligibility for financial aid at their institutions.

The college will provide you with an award letter which lists the types and amounts of financial aid for which you qualify. Be sure to respond to the college as requested as failure to do so will be interpreted as declining the aid offered.

Any money that you are awarded in financial aid will be sent directly to the school that you choose to attend.

What other types of financial aid is available?

Grants – financial aid that does not have to be repaid.
Scholarships – awarded through private donors, colleges and other organizations. Do not have to be repaid, but most are based on merit or financial need.
Work Study – allows you to earn money for your education.

Loans – allow you to borrow money for school and must be repaid with interest. After exhausting all other sources of financial aid, federal student loans can help you achieve your goals of earning a post secondary education.

What kinds of student loans are available?

PLUS loan

Stafford loans

Available to parents borrowing on behalf of dependent undergraduate students and are available to graduate and professional students.

Subsidized and unsubsidized Federal Stafford loans are the most common types of education loans.

Federal PLUS loans:

Are not based on financial need
Require the borrower to pay the interest for the life of the loan
Have a fixed interest rate
Have a 3% federal origination fee and a 1% federal default fee which may be deducted from the loan amount.
Have a loan limit equal to the cost of attendance minus other financial aid received.
Do not have a grace period. Repayment of principal and interest begins approximately 60 days after final disbursement of the loan.
Loan deferment may be requested for loans disbursed after July 1, 2008 by calling the Direct Loan Servicing Center at 1-800-848-0979. Request must be made after the loan funds have disbursed.

All Federal Stafford Loans:

Have a fixed interest rate if disbursed on or after July 1.
Have a 1.5% federal origination fee and 1% federal default fee which may be deducted from the loan amount
Have a grace period. Repayment begins six months after you graduate, leave school or drop to less than half-time.

Private Loans

Private student loans can help to bridge the gap between any government student aid you receive and the amount needed to attend your school of choice. Applying for a private student loan should be considered only after you have exhausted all federal student loan options. Contact Kathy Mahlberg at the Downtown Harlan Office at 755-5112 for more information about obtaining a private student loan with SCSB as your lender.

Additional College Planning Assistance

If you are looking for information on planning for, applying to, paying for a succeeding in college, Shelby County State Bank recommends the Iowa College Access Network (ICAN). ICAN offers free services, including assistance with completing the Free Application for Federal Student Aid (FAFSA), to students and their families. Visit www.ICANsucceed.org.