loan resources

Loan Resources

  1. Apply for financial aid – Once you complete the FAFSA, the Financial Aid Office will determine student eligibility for financial aid (including loans) and notify students of their financial aid award.
  2. Review award package on NetPartner – It is important to make informed decisions and borrow wisely. Scholarships and grants do not need to be repaid. Students are not required to borrow the full amount of loans that have been offered.  Understand the ways to pay for education expenses – grants, scholarships, installment payment plan, tuition prepayment plan, and loans. Federal loans offer borrower protections in the form of deferment and forbearance options.
  3. Your awards, including loans, are accepted for you – Students can choose to accept the full amount offered, accept a partial amount based on what is needed, or decline the loans completely.  Students must email the Financial Aid Office at financialaid@mcm.edu to request to have their loans adjusted.
  4. Complete loan requirements – Incomplete requirements are displayed in NetPartner immediately after the loan is accepted. Loan requirements generally include completion of entrance counseling and a promissory note.
  5. Disbursement – Once loans have been accepted and all requirements have been completed, the loan funds will be disbursed (paid) to the student account on the date set for that semester. If the loan disbursement results in a credit balance on the student account, students may request a refund from the Student Accounts department. ( 325-793-3815 or studentbilling@mcm.edu)
  6. Keep track of borrowing each year – Borrowers can now access their federal student aid history directly on the NSLDS
  7. (National Student Loan Database System). Borrowers can view their federal student aid history, get their federal servicer’s contact information, and download their federal student aid history using the MyData Download function.
  8. Complete Exit Counseling before leaving school – Exit Counseling is a mandatory requirement whether you are taking a leave of absence, withdrawing, graduating, or enrolling less than half-time.
  9. Repayment – Loans enter a grace period when you leave school and then enter repayment. Get to know your servicers and set up online access to repay your loans.

YOUR STUDENT MUST BE ENROLLED IN THE CURRENT SEMESTER

In order to apply for the parent’s Plus Loan log in using the FSA ID that was created to complete the FAFSA.  Please note that while the website to complete the FAFSA and the website to complete the PLUS loan application are different, they are both Department of Education websites.  If you have problems with your FSA ID or creating an account please call the 800 listed for help.

Once you have logged in, you will select “Apply for PLUS Loan”; then on the next screen, select “Complete PLUS Request for Parents”.  Complete the loan application as directed.

A denial on this PLUS loan application will provide you with several options:

  • Do not pursue PLUS loan
    • Parent is accepting the denial.  Student will receive appropriate additional Unsubsidized Loans; which is the student’s to repay.
    • No further action is necessary on the parent’s part.
  • Pursue Endorser
    • Parent is denied, but going to find an endorser (co-signer)
    • Student will not be awarded until endorser is approved.
    • Parent must complete PLUS counseling
    • Endorser must complete Endorser Addendum. ( www.studentloans.gov)
    • Parent must sign PLUS Master Promissory Note
    • Parent may at any time decide not to pursue the endorser and accept the denial of the PLUS loan.
      • Parent must contact McMurry Financial Aid in writing; email is fine, that the parent will no longer attempt to pursue an endorser.
  • Appeal
    • Parent will apply for an appeal, following the instructions from www.studentloans.gov, based on extenuating circumstances.
      • If approved,
      • If denied,
        • Student will be awarded additional unsubsidized loan; which is his to repay.
        • No further action is required by the Parent.
  • Unsure or Don’t Know
    • Application is considered denied, and McMurry will follow the “Do Not pursue Plus Loan” option.
  • Accepted
    • Parent’s application has been accepted
    • Parent must sign PLUS loan Master Promissory Note
    • Student will be awarded the PLUS loan in the amount requested on the application.
    • **At no time are parent’s required to take the PLUS loan, even if they are accepted.  Please contact the Financial Aid office if the parent wishes to decline the accepted PLUS loan

Additional state and private loan opportunities are available for students.

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Understanding Loan Terminology & Policies

You must repay your loans even if you don’t complete your education, can’t find a job related to your program of study, or are unhappy with the education you paid for with your loan. However, certain circumstances might lead to your loans being forgiven, canceled, or discharged.

Type of Forgiveness

Federal Direct Stafford / PLUS Loans

Federal Perkins Loans

Texas B-On-Time (BOT) Loan

Total and Permanent Disability Discharge

X

X

Death Discharge

X

X

Teacher Loan Forgiveness

X

Public Service Loan Forgiveness

X

Perkins Loan Cancellation and Discharge (includes Teacher Cancellation)

X

Graduation GPA Forgiveness

X

Important Tips

  • Cancellation/forgiveness is not automatic; borrowers must submit a completed application to their servicer.
  • The servicer will determine eligibility and notify the borrower once the request has been processed.
  • The borrower is responsible to continue making regular monthly payments until the request has been processed.

Application Process
Borrowers must contact their loan servicer to apply for any of the cancellation or forgiveness options. (A servicer is the organization/entity responsible for collecting payments and managing the loan during repayment.)

Federal Direct Stafford or PLUS Loans: Your loan servicer will provide details and forms needed to complete the application process. Borrowers can identify their loan servicer by looking up their loan details on NSLDS (National Student Loan Database System).

Interest is the cost of borrowing money. It begins to accrue, or add up, when loan disbursements are made or credit is issued. Be it interest earned on a personal savings or checking account or interest accruing on federal student loans, private student loans, personal loans, or credit cards, it’s important for students to understand interest, how it affects them, and how to stay on top of it. The following are some tips you can offer students on how to use credit in the most advantageous way.

What Do the Terms Mean?
Understanding the definitions of common interest-related terms is important. The most commonly used terms are principal, interest rate, and capitalization.

  • Principal: The actual amount of money borrowed.
  • Interest Rate: The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.
  • Capitalization: Any unpaid interest added to the principal. Unpaid interest is often interest that accrues during times when payments are postponed, (e.g., grace periods, forbearances, or deferments). Capitalization of interest can occur at the time a loan enters repayment for the first time or after a temporary suspension of payments.

How Does it All Work?
The amount of interest that will be paid depends on:

  • The amount of money borrowed (i.e., the principal).
  • The rate at which interest is charged (i.e., the interest rate).
  • Whether the government pays the interest during periods of in-school enrollment or deferment.
  • The length of time taken to repay the loan.

How to Reduce Interest Paid
There are ways to reduce the amount of interest to be repaid.

  • Make payments when not required (e.g., during in-school, deferment, or periods that postpone payments). Doing this can avoid interest capitalization, which reduces the overall amount to be repaid.
  • Enroll in Auto Pay, which often times reduces the interest rate charged.
  • Pay more than the minimum monthly payment. Doing this may cover the accrued interest amount, and directly reduce the principal balance.

How to Calculate Interest
The amount of interest that accrues (accumulates) on loans from month to month is determined by a simple daily interest formula. This formula consists of multiplying the loan balance by the number of days since the last payment, times the interest rate factor.

Visit the Financial Student Aid (FSA) website to learn more about how interest is calculated.

Interest Rates
It’s important to keep finances healthy for many reasons. Bad credit can have a negative effect on interest rates charged on loans and/or credit cards. For example, if a lender checks a potential borrower’s credit report and finds the borrower has a record of missing payments, that lender may decide to deny credit for the customer or charge a higher interest rate for the loan than they would for a customer who has a clean credit report. A credit history in good shape can save money by allowing borrowing at lower interest rates.

How to Stay on Top of Interest
The best ways to keep interest charges from getting out of control are to:

  • Keep overall healthy finances reflected in credit ratings to ensure interest rates on loans and/or credit cards will be low.
  • Pay more than just minimum payments each month so those payments go toward the principal of a loan and not just the interest every month.

Things to Know

  • Postponement is not automatic; borrowers must submit a completed application to each of their servicers.
  • The servicer will determine eligibility and notify the borrower once the request has been processed.
  • The borrower is responsible to continue making regular monthly payments until the request has been processed.
  • The borrower must continue making interest payments during periods of forbearance.
  • The borrower must keep track of the deferment/forbearance end-date and be prepared for repayment to resume.

Deferment

A deferment is a period of time during which no payments are required and interest does not accrue, unless you have an Unsubsidized Stafford Loan. In that case, you must pay the interest. To qualify for a deferment, you must meet specific eligibility requirements.

Examples of Deferment

  • Unemployment Deferment: If you are currently unemployed or under employed (working less than 30 hours a week) and are actively seeking employment and/or you are receiving unemployment benefits, you would be eligible for an Unemployment Deferment (for Perkins loans only). There is a total of 36 months available during the term of your loan.
  • Economic Hardship Deferment: If you are working 30 hours or more and are experiencing financial hardship, you may be eligible for an Economic Hardship Deferment (for Perkins loans only). There is a total of 36 months available during the term of your loan.

How do I Request a Deferment?

Federal Direct Stafford or PLUS Loans: Your loan servicer will provide details and forms needed to complete the application process. Borrowers can identify their loan servicer by looking up their loan details on the National Student Loan Database System.

NSLDS

Forbearance

If you are not eligible for a deferment, but are temporarily unable to meet your repayment schedule, you may be eligible for a forbearance. Forbearance occurs when your servicer agrees to either temporarily reduce or postpone your student loan payments. Interest continues to accrue and you are responsible for paying it.

Examples of Forbearance

  • Discretionary Forbearances: For discretionary forbearances, your lender decides whether to grant forbearance or not.

You can request a discretionary forbearance for the following reasons:

    • Financial hardship
    • Illness
  • Mandatory Forbearances: For mandatory forbearances, if you meet the eligibility criteria for the forbearance, your lender is required to grant the forbearance.

You can request a mandatory forbearance for the following reasons:

    • You are serving in a medical or dental internship or residency program, and you meet specific requirements.
    • The total amount you owe each month for all the student loans you received is 20 percent or more of your total monthly gross income (additional conditions apply).
    • You are serving in a national service position for which you received a national service award.
    • You are performing teaching service that would qualify for teacher loan forgiveness.
    • You qualify for partial repayment of your loans under the U.S. Department of Defense Student Loan Repayment Program.
    • You are a member of the National Guard and have been activated by a governor, but you are not eligible for a military deferment.

How do I request forbearance?
You must apply by making a request to your loan servicer. In some cases, you must provide documentation to support your request.

Direct Consolidation Loan

A Direct Consolidation Loan allows a borrower to consolidate (combine) multiple federal student loans into one new loan. The result is a single monthly payment instead of multiple payments.

Eligible Loans
Eligible loans include subsidized and unsubsidized Direct and FFEL Stafford Loans, Direct and FFEL PLUS Loans, Federal Perkins Loans, and, in some cases, existing consolidation loans. Private education loans are not eligible for consolidation.

Interest Rate
The fixed rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%. For the most current interest rate information visit studentaid.ed.gov.

Repayment
Repayment begins immediately upon disbursement of the loan. (The first payment will be due within 60 days.) The repayment term ranges from 10 to 30 years, depending on the amount of your consolidation loan and your other education loan debt and the repayment plan you select.

Considerations
Consolidation offers lower monthly payments by giving you up to 30 years to repay your loans. However, increasing the length of your repayment period means you will make more payments and pay more in interest than you would otherwise.  If you don’t need monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidation loan.

Once your loans are combined into a Direct Consolidation Loan, they cannot be removed. The loans that were consolidated have been paid off and no longer exist. Take the time to study the pros and cons of consolidation before you submit your application.

Application Process
To begin a new Direct Consolidation Loan application a borrower will sign in using his or her Federal Student Aid ID and complete the steps below:

  1. Choose Loans & Servicer The applicant’s federal education loan information will be retrieved from NSLDS and will populate within the application.  The applicant can choose which loans to include in the consolidation. An applicant who has a loan that is still in the grace period and wants to consolidate that loan will be able to choose to delay the processing of the application until closer to the end of the grace period. An applicant will choose the federal loan servicer that he or she wants to complete the consolidation.  The four consolidation servicers are: FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet.
  2. Repayment Plan Selection An applicant will select a repayment plan.  An applicant who is interested in one of the “income-driven” repayment plans will be able to complete the Electronic Income-Based Repayment (IBR)/Pay As You Earn/Income-Contingent Repayment (ICR) Plan Request as part of the Direct Consolidation Loan process.
  3. Terms & Conditions
    An applicant will review terms and conditions as well as the Privacy Act notice.
  4. Borrower & Reference Information
    An applicant will enter address, contact, employer, and reference information.
  5. Review & Sign
    An applicant will review information and edit, if necessary, before   signing and submitting the Federal Direct Consolidation Loan Application and Promissory Note. Once the application is submitted, the selected servicer will complete the processing and follow-up with the applicant.
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What is Default?
To default means you failed to make payments on your student loan as scheduled according to the terms of your promissory note.

When is a loan placed in default?
In general, a federal student loan is placed in default when a borrower doesn’t make a payment and has been unreachable or unresponsive to requests for payment for 270-360 days after the first missed payment.

What is a Delinquency Period?
After a borrower misses a payment his/her loan enters a delinquency period. During the delinquency period, the lender must make repeated efforts to locate and contact the borrower about repayment. If the lender is unsuccessful, steps will be taken to place the loan in default.

Loan Repayment Triggers
Graduating, withdrawing from classes, or dropping below half-time enrollment can trigger the repayment process to begin.

Consequences of Default
Unlike other consumer loans, student loans usually can’t be discharged through bankruptcy and will likely stay with borrowers for the rest of their lives.

A borrower with a defaulted loan faces these consequences:

  • Payment of entire loan balance (principal and interest) becomes due immediately
  • Withheld Social Security retirement benefits and disability benefits
  • Your student loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney’s fees, and any other costs associated with the collection process.
  • You will lose eligibility for additional federal student aid
  • The status of your loan account is reported to all of the major credit bureaus every month. A past due or defaulted status will negatively impact your credit history for up to 7 years
  • Your employer (at the request of the federal government) can withhold money from your pay and send the money to the government. This process is called wage garnishment
  • Even if you file bankruptcy, you will still be responsible to make your student loan payments as scheduled.

How do I avoid defaulting on my student loan?

  • Borrowers who have difficulty making loan payments should contact the lender as soon as possible to see which options are available to them.
  • Borrowers who try to avoid their lender could lose out on some readily available repayment benefits and options.
  • The best way to avoid defaulting on your loan is to make payments on time!
  • Discover steps you can take to repay your federal student loan successfully and avoid going into default.

What if my loan is already in default?
Don’t get discouraged! If you are in default on your federal student loan, there are options for getting out of default, including loan repayment, loan rehabilitation, and loan consolidation.

Find Out More

When you leave school, or drop below half-time status, the student loans you have borrowed will enter a grace period.  This is a period of time where no payments are required.

There are no pre-payment penalties on any of the Federal Loans. This means borrowers may begin early if they choose and pay the loan in full early with no penalties.

Interest does not accrue on most loans during school or the grace period.

The Unsubsidized Stafford Loan and PLUS Loan are the exception to this, and interest does accrue during this time.

Making payments during a grace period is a good way to reduce the overall loan balance since payments are applied directly toward the principal balance for any subsidized loans (Subsidized Stafford, Perkins, Federal Direct)

Loan TypeGrace Period
(Length of time before repayment begins)
Federal Stafford (Subsidized and Unsubsidized) Loans6 months
Federal Parent
PLUS Loans
No automatic grace period.*
Federal Graduate
PLUS Loans
6 months
College Access Loans6 months
Texas B-On-Time Loan6 months

*The Plus loan application offers the parent a choice of beginning payments immediately or deferring them.