Loan Basics and Types

 

How do I get loans?

- Fill out the FAFSA and wait for your financial aid package.

- Your financial aid package from your school will tell you how to accept all or part of your loans.

- In order to official get your loans you need to complete entrance counseling to ensure you understand your obligation to re-pay the loan and sign a Master Promissory Note agreeing to the terms of the loan.

 

The U.S. Department of Education has two federal student loan programs:

1. The William D. Ford Federal Direct Loan Program

• Direct Subsidized Loans = this type of loan is unfortunately unavailable to graduate or professional students.

• Direct Unsubsidized Loans = this is a loan from the government that has an interest rate of 5.41% that the student is responsible for paying for during all periods. The amounts able to borrow ranged from $5,500 to $20,500 depending on the education level. There is also a 1.072% loan fee associated with this loan. You do not have to begin repayment of this loan until six months after you graduate. http://studentaid.ed.gov/types/loans/subsidized-unsubsidized

• Direct Plus Loans = this is a loan for graduate and professional students. The interest rate on this loan is 6.41% and you are responsible for the interest at all times. In order to get this loan you need to have a good credit history. The maximum amount loaned is the cost of attendance minus any other financial aid. http://studentaid.ed.gov/types/loans/plus

• Direct Consolidation Loans = loan program that allows you to combine multiple federal education loans into one loan so you are only paying one monthly payment.

 

2. Federal Perkins Loan Program = this Is a school-based loan program for undergraduate, graduate, and professional students that is given to students who exhibit exceptional financial need. Under this program, the school is the lender and as such not all schools participate in this program. The interest rate is 5% and you can receive up to $8000 per year with a maximum amount of $60,000. As a full-time student, you will have nine months after you graduate before you must begin repayment of the loan. http://studentaid.ed.gov/types/loans/perkins

 

- compare loan types = http://studentaid.ed.gov/sites/default/files/federal-loan-programs.pdf

 

3. Other loans

• Health Professions Student Loan = this is a veterinary student loan for any student enrolled full-time that has proven they are in financial need. It has a 5% annual interest rate that is deferred until repayment begins one year after the student completed their education.

• Graduate PLUS Loan = This is a loan for graduate and professional students that does need credit approval. The interest rate varies for this loan with a max rate of 10.5% for students. There is a loan origination fee of 4.204% and no payment is required until 6 months after graduation.

• Loan for Disadvantaged Students (LDS) = this is a loan for any students enrolled full-time with proven financial need. It has a 5% annual interest rate that is deferred until repayment begins one year after the student completed their education.

• Private Loans = getting private loans is generally a last resort as their fees and interest are usually higher and most aren't eligable for late repayment or forgiveness programs.

 

How do you repay your loans?

Generally when you take out a loan, you are going to choose a particular loan repayment plan to start out with. This can be changed if your situation changes. Choosing the right repayment plan for you is extremely important and can help save you money and time. In order to select your repayment plan you need to contact your loan servicer, but prior to that it is a good idea to use the repayment estimator to get an early look at what plan you are eligible for and what you would be paying each month. https://studentloans.gov/myDirectLoan/index.action

 

Types of repayment plans:

***the type of plan you choose will depend on the type of loans you have, the amount of loans you have, and your professional/life circumstances. You can go to the following website to learn about all of the below repayment plan options: http://studentaid.ed.gov/repay-loans/understand/plans

- Standard Repayment Plan

- Graduated Repayment Plan

- Extended Repayment Plan

- Income-based Repayment Plan

- Pay As You Earn Repayment Plan

- Income-Contingent Repayment Plan

- Income-Sensitive Repayment Plan

 

Canceled or discharged federal student loan situations

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. You can find a complete list with requirement details at the following website: http://studentaid.ed.gov/repay-loans/forgiveness-cancellation

- Total or Permanent Disability Discharge

- Death Discharge

- Discharge in Bankruptcy

- Closed School Discharge

- False Certification of Student Eligibility or Unauthorized Payment Discharge

- Unpaid Refund Discharge

- Perkins Loan Cancellation and Discharge

 

Loan Forgiveness and Special Repayment Programs

These are specialized programs for students interested or willing to work in a particular area of veterinary medicine that is considered to have a veterinary shortage. Depending on the program, all or some of your student loans will be forgiven in exchange for a certain number of years in that field.

 

• Public Service Loan Forgiveness Program = This program was established by the College Cost Reduction and Access Act of 2007. The program discharges the remaining debt after 10 years of full-time employment in public service. The borrower must have made 120 payments as part of the Direct Loan program in order to obtain this benefit. Public service jobs include teachers, first responders, public librarians, social workers, public defenders and prosecutors, and people who work for tax-exempt charitable organizations. It also includes people who work for the government and the military. http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

• Veterinary Medical Loan Repayment Program = This is the only federal program established exclusively for veterinary loan repayment. It is a competitive program as you have to fill out an application and be chosen. If selected, the VMLRP will pay up to $25,000 each year towards your educational loans as you work in a NIFA designated veterinarian shortage situation for three years. http://www.nifa.usda.gov/nea/animals/in_focus/an_health_if_vmlrp.html

• Food Supply Veterinary Medicine Repayment Program = Recipients are required to commit to three years of veterinary service in a designated veterinary shortage area. Loan repayment benefits are limited to payments of the principal and interest on government and commercial loans received for attendance at an American Veterinary Medical Association-accredited college of veterinary medicine resulting in a degree of Doctor of Veterinary Medicine or the equivalent.

• The National Institutes of Health Loan Repayment Program = Individuals with a health professional doctoral degree, such as a DVM, who have a total qualified educational debt equal to or in excess of 20 percent of your base salary are eligible for this program. The NIH will repay your student loans, up to $35,000 per year, in exchange for at least two years of conducting qualified research funded by domestic nonprofit organization or U.S. federal, state, or local government entities. You will also get a regular salary on top of the loan forgiveness. http://www.lrp.nih.gov/about_the_programs/index.aspx

• Federal Faculty Loan Repayment Program = This program will repay up to $40,000 in student loans for eligible health professions faculty from disadvantaged backgrounds including veterinary medical college faculty. Individuals selected to participate in the program agree to serve on the faculty of an accredited health professions college or university for 2 years. Participants should also receive matching funds from their employing educational institution. http://www.hrsa.gov/loanscholarships/repayment/faculty/