Student Loan Programs

The College administers the full range of Title IV Federal Student Aid Programs. These include the William D. Ford Direct Loan program for Federal loans. To be considered for funding from these programs, a student must submit the Free Application for Federal Student Aid (FAFSA) indicating Southern Vermont College School Code (003693). The FAFSA may be completed online at www.fafsa.ed.gov. The College also coordinates the certification and payment of alternative or private student loans.

Federal Direct Loan Program

Direct Loans are federally insured, low-interest education loans for students and parents. These include the Federal Direct Subsidized Loan, the Federal Direct Unsubsidized Loan, and the Federal Direct Parent Loan for Undergraduate Students (PLUS). The Direct Loan Program is funded directly by the Federal Government which eliminates some of the confusion by offering a single source and process for Federal student loans. Student and parent borrowers will receive funding directly from the U.S. Department of Education rather than private lending institutions.

Direct Loans are not sold so borrowers will know who holds their loans during repayment. Additionally, borrowers can consolidate their existing federal loans with their Direct Loans, enabling them to make one payment to one lender.

The Direct Loan Program offers a Public Service Loan Forgiveness program and an income-based repayment option for students in certain public professions or who have low incomes.

Interest rates may be subject to change each year.

To qualify the Free Application for Federal Student Aid (FAFSA) must be completed at www.fafsa.ed.gov.

First-time borrowers will need to complete the Entrance Counseling and the Master Promissory Note (MPN) at www.studentloans.gov. Once both items are complete, the Financial Aid Office will be notified by the US Department of Education.

Federal Direct Subsidized Loan

Direct Subsidized loans are for undergraduate students only with demonstrated financial need as determined by federal regulations and the FAFSA application. No interest is charged while a student is in school at least halftime and during deferment periods. The Interest rate is fixed at 3.86% for loans disbursed from July 1, 2013, through June 30, 2014. There is a loan origination fee of 1.072% for loans disbursed from December 1, 2013, through September 30, 2014. Standard repayment is based on a 10 year term with a six month grace period. There are other repayment options available for a longer term which are income contingent.  More information can be found on the www.studentloans.gov Web site.

Federal Direct Unsubsidized Loan

Direct Unsubsidized loans for undergraduate students who qualify for federal financial assistance and have financial need in addition to the Direct Subsidized Program. This loan is also available for those students who do not show need. Students will be responsible for the interest payments on the loan while in school. The interest may be paid monthly while you are in school or you may capitalize the interest by allowing it to accrue and by adding it to your principal when you go into repayment. Borrowers receive a six-month grace period, which means that you do not have to begin repayment until six months after you graduate or when your enrollment drops below half-time status. The Interest rate is fixed at 3.86% for loans disbursed from July 1, 2013, through June 30, 2014. There is a loan origination fee of 1.072% for loans disbursed from December 1, 2013, through September 30, 2014. Standard repayment is based on a 10-year term with a six month grace period. There are other repayment options available for a longer term which are income contingent.  More information can be found on the www.studentloans.gov Web site.

Federal Direct Loan Limits

There are annual loan limits and aggregate loan limits for the Federal Direct Loan programs:    
    
Loan Limits

Dependent Students Base Amount Additional Unsubsidized Loan Amount
Freshman $3,500 $2,000
Sophomore $4,500 $2,000
Junior or Senior $5,500 $2,000

Independent Undergraduate and Dependent Students Whose Parents Cannot Borrow a PLUS Loan

Base
Amount
Additional Unsubsidized
Loan Amount
Freshman $3,500 $6,000
Sophomore $4,500 $6,000
Junior or Senior $5,500 $7,000

Aggregate Loan Limits (effective July 1, 2013)

Undergraduate dependent students can borrow a maximum of $31,000 (no more than $23,000 of which can be subsidized).

Undergraduate independent students can borrow a maximum of $57,500 (no more than $23,000 of which can be subsidized).

Note: Effective July 1, 2013, federal law limits the Direct Loan subsidy for new borrowers to an aggregate period of no more than 150% of program length. Once that limit has been exceeded, a student may borrow only unsubsidized loans and will begin to incur interest charges on outstanding subsidized loans.

Federal Direct PLUS Loan

Before the parent applies for a PLUS loan, the student must complete a FAFSA at www.fafsa.ed.gov and be eligible for federal financial aid. The student must also be enrolled and participating in 6 degree-applicable credit hours for the parent to borrow this loan and receive disbursements.

Facts you as a parent should know:
•    PLUS loans can be borrowed to pay for your DEPENDENT student’s educational expenses.
•    A credit check will need to be completed with the US Department of Education. Applicants who do not receive credit approval may be able to receive the loan if they obtain an endorser (someone who promises to repay the loan if you do not make payments according to the terms of the loan).
•    Borrowers must meet the citizenship requirements and not be in default or owe a repayment to the Federal Student Aid Program.
•    Parents can apply on the www.studentloans.gov Web site. The amount a parent can request for an academic year is determined by taking the Cost of Attendance and subtracting the student’s financial aid award.
•    Loan funds are applied to the student’s account to pay any balance outstanding at the time of the disbursement. Any remaining funds not used to pay a balance are refunded.
•    The interest rate on the PLUS loan is fixed at 6.41% for  loans disbursed from July 1, 2013, through June 30, 2014. Interest begins accruing with the first disbursement of funds.
•    There is an origination fee deducted from each disbursement of the loan to help reduce the cost of the loans. The fee is currently 4.288% for loans disbursed from December 1, 2013, through September 30, 2014.
•    Standard repayment begins within 60 days after the final loan disbursement for the period of enrollment of the loan. Parents also have the option to request a deferment of repayment while the student is enrolled at least half time.
•     A parent can request a deferment; call the Direct Loan Servicing Center at 1-800-848-0979. Deferments will not be approved until the first loan disbursement has been made.

Alternative Loans

An Alternative loan is a private loan separate from any federal loans the student may already be borrowing.  Students are encouraged to exhaust all federal student loans offered to them prior to using an Alternative/Private loan. The annual loan maximum would be the total Cost of Attendance minus the offered financial aid. It is up to the student to apply for the loan and work with the loan company to be approved. Please note that the student may need a cosigner. Once the loan has been fully approved, the loan company will contact SVC's Financial Aid Office, where the loan will be certified for up to as much as the student is eligible to receive (Cost of Attendance minus financial aid being received).

The following list of lenders are the lenders our current students have used most often:

SALLIE MAE - WWW.SALLIEMAE.COM
WELLS FARGO - WELLSFARGO.COM/STUDENT
DISCOVER - DISCOVERSTUDENTLOANS.COM
VSAC – VERMONT ADVANTAGE LOAN,  WWW.VSAC.ORG

Other SVC Financial Aid Information