Types of Loans

Grants, scholarships, student employment, and other types of aid may not be sufficient to cover necessary educational-related expenses. You may want to consider a student loan to supplement other financial aid amounts. Loans that help meet college expenses must be repaid.  Carefully budget your expenses to avoid relying too heavily on loans. Remember, whether you complete your educational program or not, you must pay back loans.

There are three types of educational loans and several services available:

CONTENTS:

Direct Stafford Loans

The Federal Direct Stafford Student Loan program is the most widely used student loan program. Borrowing limits, interest rates, and terms of repayment are defined by the U.S. Department of Education. Direct Stafford Loans are available to virtually all students enrolled in a degree or certificate program. The interest rate is 3.86% for loans disbursed between July 1, 2013 and June 30, 2014, both while students are in college, and during repayment. Federal law makes it a fixed interest rate.

Key points of the Direct Stafford Loan program:

  • You must have submitted a FAFSA to be eligible.
  • You must be enrolled in 6 or more credits each semester.
  • You must not be in default on any federal educational loan or owe a refund on an educational grant.
  • There is no credit check.
  • Repayment begins 6 months after you graduate, withdraw, drop below half-time (5 or fewer credits) status, or stop attending.
  • You can choose to make interest payments while you are enrolled in college.
  • You have up to 10 years to repay.
  • The amount that you can borrow per year is determined by the number of credits you have earned toward your program or major (refer to table below).
Academic Level/
Credits Earned Toward
Your Program/Major
Dependent Students
Annual Loan Limit
Independent Students
(or dependent student
with PLUS denial)
Annual Loan Limit
Freshman
Less than 30 credits earned
toward degree or certificate
$5,500
($3,500 between subsidized
and unsubsidized, plus an additional $2,000 unsubsidized)
$9,500
($3,500 between subsidized
and unsubsidized, plus an
additional $6,000 unsubsidized)
Sophomore
30 or more credits toward an associate's degree or certificate
or
30 to 59 credits toward
a bachelor's degree
$6,500
($4,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized)
$10,500
($4,500 between subsidized and unsubsidized, plus an additional $6,000 unsubsidized)
Junior or Senior
60 or more credits toward
a bachelor's degree
$7,500
($5,500 between subsidized and unsubsidized, plus an additional $2,000 unsubsidized)
$12,500
($5,500 between subsidized and unsubsidized, plus an additional $7,000 unsubsidized)
  What is the difference between subsidized and unsubsidized Federal Direct Stafford Loans?

When should I apply for a Direct Stafford Loan?

If you will start attending during the Fall Semester, apply anytime after April 1 of that year and at least three weeks before your tuition eBill is due in early August. If you will start during the Spring Semester, apply after October 1 of the previous year and at least three weeks before your tuition bill is due in mid-December. However, the Financial Aid Office cannot actually credit your student account with a loan until after you schedule classes.

How do I apply for a Federal Direct Stafford Loan?

You must complete all of these steps in the following order to receive a Federal Direct Stafford Loan:

  1. Review and revise, if needed, your Penn College Financial Aid Application (FAA) for the upcoming academic year. (Complete a FAA if you do not have one for the year you are applying for the loan.)
  2. Complete a FAFSA for the academic year.*
  3. Complete Direct Loan Entrance Counseling at studentloans.gov. Click on the green 'Sign In' box to sign in using your Federal PIN.
  4. Complete a Direct Loan Master Promissory Note (MPN) at studentloans.gov. Click on the green 'Sign In' box to sign in using your Federal PIN.

    • Please note that if you have borrowed through the Direct Stafford Loan Program in the last twelve (12) months, you do not need to complete steps 3 and 4 above.

After you apply, you can learn if the Financial Aid Office has received the two parts to the Direct Loan application process from the Financial Aid Award Summary page at SIS. Allow two to four weekdays.

* These applications only need to be completed once per academic year. If you are unsure if you have completed them, please contact the Financial Aid Office.

If I don't need the maximum Direct Stafford Loan funds in any one semester, how can I reduce my amount?

Although we credit your eBill with the maximum Direct Stafford Loan amounts, we encourage you to be conscious of keeping your loan debt to a minimum. You do not have to accept the maximum amount. Learn how to cancel any part or all of your Direct Stafford Loan funds.

  • Frequently Asked Questions about Federal Direct Stafford Loans, including aggregate loan limits
  • Please be aware that information about your Federal loan(s) will be submitted to the National Student Loan Data System (NSLDS). Information in NSLDS is accessible by colleges, lenders, servicers, and guarantors for specific purposes as authorized by the U.S. Department of Education.
  • The U.S. Department of Education provides more information on Direct Federal Stafford Loans.

CONTENTS:

Direct Parent PLUS Loan

Parents Apply for a Federal Direct PLUS Loan

The Federal Direct Parent Loan for Undergraduate Students (PLUS) lets parents borrow money to pay the education expenses of their dependent student. The interest rate is higher than it is for Federal Direct Stafford Loans, at a fixed 6.41% rate.

  • Students must be enrolled in 6 or more credits each semester.
  • The U.S. Department of Education will perform a credit check on the parent applicant.
  • Parents normally begin repayment when their student is in college, although they can request to defer payments by contacting the Direct Loan Servicing Center.
  • Parents have up to 10 years to repay.
  • The annual loan limit is the cost of attendance minus the amount of all other financial aid a student will receive.

When should your parent apply for a parent Direct PLUS Loan?

If you will start attending during the Fall Semester, your parent can apply anytime after June 1 of that year and at least three weeks before your tuition eBill is due in early August. If you will start during the Spring Semester, apply after November 1 of the previous year and at least three weeks before your tuition eBill is due in mid-December. However, the Financial Aid Office cannot actually credit your student account with a loan until after you schedule classes.

How does your parent apply for a Federal PLUS Loan?

    • Note: If your parent is applying for the 2014-2015 academic year, please do not start the process until June 1, 2014, unless applying for Summer 2014 Semester which can be done anytime after you (student) schedule for Summer 2014 classes. If your parent applies too early, your parent's credit check status will expire.
  • You (student) must review and revise, if needed, your Penn College Financial Aid Application (FAA) for the upcoming academic year.* (You will need to complete a FAA if you do not have one for the year your parent is applying for the loan.)
  • Student and parent(s) must complete a FAFSA for the academic year.*
  • Next, there are two (2) separate steps to a Parent PLUS Loan application. Both steps must be completed to receive a Parent PLUS. This is a change from prior years when there were three steps to the application process.

    1. Your parent borrower must submit a PLUS Loan Request with the U.S. Department of Education at studentloans.gov. Your parent clicks on the green 'Sign In' box to sign in using your parent's Federal PIN. This request will initiate a credit check. (If your parent is denied, please refer to this additional information. If your parent is approved, your parent should continue to step 2.)
    2. On the same website as in step 1, your parent borrower completes a Direct PLUS Master Promissory Note (MPN). If your parent has borrowed PLUS Loan funds for you in the past twelve (12) months, this step is not necessary.

* These applications only need to be completed once per academic year, if you are unsure if you have completed them, please contact the Financial Aid Office.

Separate MPNs need to be submitted for different students in the same family.

How much can my parent borrow?

The academic year limit on PLUS Loans is equal to your total cost of attendance minus the sum of all other financial aid you receive. For example, if your total cost of attendance is $20,000 and you receive $4,000 in other financial aid, your parents could borrow up to, but no more than, $16,000.

Could my parent be denied a parent PLUS loan?

Yes, because the Direct Parent PLUS loan is based on creditworthiness. A credit report of a parent borrower will be pulled and reviewed by the U.S. Department of Education. If your parent is denied a PLUS loan the U.S. Department of Education will automatically send your parent borrower an appeal packet outlining the steps to take to appeal the credit decision or to obtain a creditworthy endorser (cosigner) for a Federal Direct Parent PLUS Loan.

If your parent knows there is an issue with his/her credit report or does not have an endorser to use, the PLUS denial would stand and you would then be eligible to receive an additional unsubsidized Federal Direct Stafford Loan. If you are interested in the additional unsubsidized Direct Stafford loan, you should contact the Financial Aid Office to make sure we have a copy of the denial. We are unable to process the additional unsubsidized Stafford Loan without a copy of the PLUS denial. The amount which you are eligible to receive is based on the number of credits you have earned toward your program or major.

  • Please be aware that information about your Federal loan(s) will be submitted to the National Student Loan Data System (NSLDS). Information in NSLDS is accessible by colleges, lenders, servicers, and guarantors for specific purposes as authorized by the U.S. Department of Education.

CONTENTS:

Private Alternative Loans

If your cost of education exceeds your total funding from grants, scholarships, and government-backed loans, a private or alternative loan is another option. A private alternative loan is a non-federal educational loan, through a private lending institution, typically issued in a student’s name and requiring a creditworthy cosigner. Each private alternative loan lender has different eligibility requirements, loan rates, repayment terms, and conditions.

These student loans are not backed by the federal government, but are offered by a number of reputable lenders.

  • Lenders perform a credit check on each student and cosigner
  • Interest rates and fees vary, so look for the best deal (review our list of questions to ask the lender below)
  • Maximum loan amounts, grace periods, and repayment periods also vary
  • Apply quickly online through the lender's website
  • Most lenders require that you're enrolled in 6 or more credits a semester

When should I apply for a private alternative loan?

We first encourage you to submit a FAFSA for the academic year, to learn if you qualify for government grants and other types of financial aid. We also recommend borrowing from the Federal Direct Stafford Loan program before considering a private alternative loan. If you only wish to apply for a private alternative loan and you refuse to submit a FAFSA please contact the Financial Aid Office. For students who will start attending during the Fall Semester, apply anytime after June 1 of that year and at least three weeks before your tuition bill is due in early August. If you will start during the Spring Semester, apply after October 1 of the previous year and at least three weeks before your tuition bill is due in mid-December.

Do not apply for a private alternative loan more than 90 days prior to the beginning of the semester for which you are applying. Otherwise, your credit check may run out and your loan will not be valid at the time of scheduled disbursement.

How do I apply for a private alternative loan?

First refer to these questions. They will give you guidance on how much to apply for and how to choose a lender.

Note: Due to an amendment to the Truth in Lending Act, students who apply for a private alternative loan need to complete the following steps. Please allow sufficient time for processing, as these new requirements may delay loan disbursements by an additional 1-2 weeks.

  1. Apply for a private alternative student loan through the lender of your choice.
  2. Send any requested documentation for you and/or your cosigner to your lender.
  3. Sign your loan application or promissory note. Instruct your cosigner to also sign the application, if applicable.
  4. If you are pre-approved, accept or decline your loan offer from the lender.
  5. Complete the Private Alternative Loan Self-Certification form provided by the lender. If your lender does not provide you with the Self-Certification form, print the Department of Education’s Private Education Loan Applicant Self-Certification form. All the information you need to complete the Self-Certification form is found on your Estimated Cost of Attendance, available on SIS. The following steps will guide you to the Estimated Cost of Attendance;
    1. Log in to SIS.
    2. Under 'Financial Information', select 'View Financial Aid Information'.
    3. From 'Select Year', choose the academic year for which you are applying for the loan.  This will bring you to the Financial Aid Award Summary page; at the bottom select 'Estimated Cost of Attendance' to find your cost of attendance (COA) and estimated financial assistance (Total Aid) for the period of enrollment covered by your loan. 
    4. Return the completed form to your lender.
  6. Read and understand the three separate disclosures you will receive from your lender throughout the application process. You will receive one disclosure when you apply, another disclosure when you are approved by your lender and offered the loan, and the final disclosure will be sent prior to disbursement.
    Your loan will not disburse until all required documentation is received by the lender.

You have the right to select the private alternative lender of your choice.

Below is a historical list of lenders with whom Penn College students have conducted business in the past 3-5 years. Neither Penn College nor the Financial Aid Office promotes, endorses, or recommends any of these loan products or lenders by including them on this historical list. Since Penn College does not endorse or recommend any private lender we do not provide direct links to any lender websites.

  • AMS (Smart Option Loan)
  • Citizens Bank TruFit Student Loan (Fixed Rate Product)
  • Citizens Bank TruFit Student Loan (Variable Rate Product)
  • Discover (Discover Student Loans)
  • M & T Bank (Smart Option Loan)
  • Mifflin County Savings Bank (iHelp Loan)
  • Nellie Mae (Smart Option Loan)
  • PNC (Solution Loan for Undergraduates)
  • PNC (Solution Loan for Health & Medical Professions)
  • SallieMae (Smart Option Loan)
  • StuFund (Smart Option Loan)
  • SunTrust Custom Choice Loan (Fixed Rate Product)
  • SunTrust Custom Choice Loan (Variable Rate Product)
  • SunTrust Custom Choice Loan for Health Professionals
  • Union Federal Savings Bank (Union Federal Private Student Loan)
  • Wells Fargo (Collegiate Loan)
  • For Alaska Residents Only: AlaskAdvantage Loan
  • For Connecticut Residents Only: Connecticut Higher Education Supplemental Loan Authority (CHESLA)
  • For Maine Residents Only: Maine Educational Loan Authority (MELA)
  • For Massachusetts Residents Only: Massachusetts Educational Financing Authority (MEFA)
  • For New Jersey residents only: NJCLASS Loan
  • For Rhode Island residents only: Rhode Island Family Education Loan (RISLA)
  • For Vermont Residents only: Vermont Student Assistance Corporation (VSAC) Advantage Loan
  • With Membership Restrictions: Credit Union Ed Access Private Student Loan
  • With Membership Restrictions: Credit Union Student Choice

An alternative loan is an agreement between the borrower and cosigner and the lender. Penn College cannot in any way be held liable in the event the borrower is dissatisfied with the rates, terms, or service provided by any lender, nor is Penn College responsible for any damages incurred by the student as a result of the student's choice of lender.

CONTENTS:

Loan Counseling & Services

Federal Direct Stafford Loan Entrance Counseling

Federal regulations state that all students who are borrowing a Federal Direct Stafford Loan for the first time at Pennsylvania College of Technology must complete an online Entrance Counseling session before any Federal Direct Stafford Loan funds will be paid to their student account. The Penn College Financial Aid Office will receive notification three to five days after you complete the Entrance Counseling online.

The purpose of the Entrance Counseling session is to provide you (the borrower) with your rights and responsibilities before you borrow a Federal Direct Stafford Loan. It will cover the importance of repayment, the consequences of default, the use of the Master Promissory Note (MPN), and provide sample monthly repayment amounts.

Access to the online Entrance Counseling session is at StudentLoans.gov. You must read and then answer several true/false questions to complete Entrance Counseling..

  • Begin by clicking on the green 'Sign In' button. You must enter your Social Security number, the first two characters of your last name, your date of birth, and your Federal PIN.
  • Choose the link 'Complete Entrance Counseling' (click it again on the next page)
  • Next, select " I am completing entrance counseling in order to receive loans as an undergraduate student." and 'Continue.'
  • Once you have completed the tutorial and quiz, return back to the home page and choose "Click Here to Review Results from Previous Entrance Counseling Quiz or Add Additional Schools that Should Receive Your Entrance Counseling Results."

Federal Direct Stafford Loan Exit Counseling

If you have received a Federal Direct Loan at Pennsylvania College of Technology and...

  • you have withdrawn from all classes,
  • you have dropped below half-time status, or
  • you are graduating or have just graduated,

You are required by Federal regulation to complete a Direct Stafford Loan Exit Counseling session.

The Penn College Financial Aid Office will notify you if you need to complete the online 'Exit Counseling', which you find under 'Tools and Resources' at StudentLoans.gov. During the counseling session you must provide your expected permanent address, the phone number of two family members, and the name and address of your expected employer (if known).

This Exit Counseling session will provide you with your rights and responsibilities as you start to repay your Federal Direct Stafford Loan and will cover the importance of repaying your loan, your repayment options, deferment and forbearance, and reasons for loan cancellation. More information can be found in the Exit Counseling Guide for Direct Loan Borrowers.

Federal Student Aid Ombudsman

Once you enter repayment of your federal education loan, if you have a problem and other reasonable efforts to resolve it have failed, we recommend you try contacting the Federal Student Aid Ombudsman. This Ombudsman office managed by the U.S. Department of Education may be able to:

  • Propose solutions to discrepancies in loan balances and payments
  • Clarify interest and collection charges
  • Clarify financial aid requirements
  • Find loan holders
  • Rehabilitate loans by establishing satisfactory repayment plans
  • Reestablish eligibility for Federal Aid
  • Find promissory notes
  • Defer or discharge loans
  • Resolve issues related to income tax refund offsets, default status, consolidations, or bankruptcies
  • Service quality, and any other customer concerns
You can contact the U.S. Department of Education's Ombudsman at:
  • U.S. Department of Education
    FSA Ombudsman
    830 First Street, NE
    Fourth Floor
    Washington, DC 20202-5144
  • Phone: 1-877-557-2575

Upromise

Upromise is a program that allows you to help reduce your student loan debt. Various merchants will contribute a percentage of purchases you make from them toward your student loan. Family and friends can join on your behalf. Be aware that many of Upromise's partners require online purchases.

Debt Management

Loans, of course, need to be repaid along with interest. From the start, be conscious of keeping your loan debt to a minimum. Good planning and preparation for courses can reduce both the amount of time and the amount of loan money that you need to complete your degree. This loan repayment calculator offered by the Department of Education can estimate the amount of your monthly loan payment after you finish your education.

Instituitional Code of Conduct for Education Loans

Pennsylvania College of Technology participates in the William D. Ford Federal Direct Loan Program which includes the Direct Stafford Subsidized and Direct Stafford Unsubsidized Student Loans, and the Direct Parent PLUS Loans. In some cases, private alternative student loans are needed to supplement the cost of education. Penn College recommends that students exhaust all other methods of financing their education before applying for private alternative loans. To comply with the 2008 Higher Education Opportunity Act (enacted August 14, 2008) Penn College adopts the following Student Loan Code of Conduct to serve as the formal guiding principles in insuring the integrity of the student aid process and ethical conduct of Penn College employees in regard to student loan practices.

1. Revenue Sharing

The term “revenue-sharing arrangement” means an arrangement between an institution and a lender which –

(i) a lender provides or issues a loan that is made, insured, or guaranteed to students under the Higher Education Act attending the institution or to the families of such students; and

(ii) the institution recommends the lender or the loan products of the lender and in exchange, the lender pays a fee or provides other material benefits, including revenue or profit sharing, to the institution, an officer or employee of the institution.

Pennsylvania College of Technology and its employees will not enter into any type of revenue-sharing arrangement with any lender, guarantor or servicer. Pennsylvania College of Technology does not provide students a preferred lender list from which to select a lender for a private student loan. All loans are processed without regard to lender or mode of transmission (i.e., electronic or paper). Pennsylvania College of Technology will neither recommend a private loan lender nor accept material benefits including revenue or profit-sharing to the institution, an officer, or an employee of the institution or an agent.

2. Gifts

Employees of the Financial Aid Office are prohibited from soliciting or accepting any gift from a lender, guarantor, or servicer of education loans.

a. Gifts include any gratuity, favor, discount, entertainment, hospitality, loan or other item. This includes a gift of services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has incurred.

b. Gifts to family members of a Pennsylvania College of Technology employee are considered to be a gift to the employee if the gift is given with the knowledge and consent of the employee and there is reason to believe the gift was given because of the official position of that employee.

3. Contracting Arrangements

Employees of the Financial Aid Office shall not accept from any lender or affiliate of any lender any fee, payment, or other financial benefit (including opportunity to purchase stock) as compensation for any consulting arrangement or other contract to provide services to a lender or on behalf of a lender relating to education loans.

4. Preferred Lender Status

Pennsylvania College of Technology participates in the William D. Ford Federal Direct Loan Program which provides student and parent loans through the U.S. Department of Education. Lenders in the private student loan industry will not be given a preferred status. Pennsylvania College of Technology will not produce a preferred lender list that gives any lender an advantage in securing business from Pennsylvania College of Technology students.

5. Private Loan Certification

Pennsylvania College of Technology will not assign a borrower’s private student loan to a particular lender; all decisions will be made by the borrower in his/her independent review of borrower benefits and lender services. Pennsylvania College of Technology will not refuse to certify, or delay certification of, any loan based on the borrower’s selection of a particular lender or guaranty agency.

6. Opportunity Pool Loan

Pennsylvania College of Technology will not request or accept from any lender any offer of funds to be used for private education loans (defined in section 140 of the Truth in Lending Act) including funds for an opportunity pool loan in exchange for Pennsylvania College of Technology providing concessions or promises regarding providing the lender with a specified number of loans made, insured or guaranteed; a specified loan volume of such loans; or a preferred lender arrangement for such loans.

7. Staffing Assistance

Pennsylvania College of Technology will not request or accept from any lender, guarantor, or servicer of student loans any assistance with call center staffing or Financial Aid Office staffing.

8. Advisory Board Compensation

Employees of the Financial Aid Office who serve on an advisory board, commission, or group established by a lender, guarantor, or group of lenders or guarantors, are prohibited from receiving anything of value from the lender, guarantor, or group of lenders or guarantors, except that the employee may be reimbursed for reasonable expenses incurred in serving on such advisory board, commission, or group.

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