Frequently Asked Questions

Even scholarships and grant opportunities sometimes are not enough to fully cover the cost of college admissions, but you don't have to be leery of student loans.

Loans can be a useful tool to cover the gap between the cost of higher education and the amount of financial aid you receive in the form of grants and scholarships.

At any step of the process, SLGFA is here to help. Contact us with any questions or concerns you may have.

Understanding Student Loans
Current Borrowers
Repaying Your Student Loans

1. What loan programs are out there?
2. How do I apply for a loan?
3. How do I complete the FAFSA?
4. How much can I borrow?
5. Are there any fees attached to any of the Federal loan programs?
6. When and how will I receive my money?
7. When will I be required by pay back my loan?
8. How much will my monthly payments be?
9. After a loan application is submitted, how long does it take to receive the loan proceeds?
10. What is a guarantee agency and what does it do?
11. Are there any loans, grants, or scholarships available to students who have already completed their training?
12. What else do I need to know?

1. What loan programs are out there?
   There are two categories of loans: Federal student loans and alternative or private loans, which are provided by private lenders, unrelated to the Federal government.
   
   There are four basic Federal student loan programs: Perkins, Stafford, PLUS, and consolidation loans.
   
   Alternative or private loans are offered through private lenders, so the terms and conditions and eligibility requirements vary from lender to lender.
   
   Since alternative loans have higher interest rates and less payment flexibility, you should fully explore Federal loan options first.
   
   
2. How do I apply for a loan?
   The process is easy. If you are using a private lender, all you have to do is complete the Free Application for Federal Student Aid FAFSA) and the Federal Stafford Loan Master Promissory Note (MPN) application.
   
   Many schools process loan applications electronically. You should check with your financial aid office to determine the process for submitting a loan application.
   
   The MPN is designed to be used as both a single year and multi-year note. Under the MPN process, most borrowers will sign a promissory note once (at the time they first borrow). You may obtain additional loans based on that same note, during the same year, or in subsequent years as long as you do not change lenders. There may be circumstances where you will be requested to complete a new MPN.
   
   If you need further assistance about how to complete the MPN or the FAFSA, contact us or come to our office . We have a computer lab and a private consultation office, where you can meet with friendly and knowledgeable staff.
   
   
3. How do I complete the FAFSA?
   The Free Application for Federal Student Aid (FAFSA) can be completed online or you can come to SLGFA , where our staff can further assist you.
   
   The FAFSA asks several questions about you, your financial information, your school plans, and more. Before completing it, you should gather all the documents that you need, including your social security number, your driver's license, income tax returns, bank statements, and investment records.
   
   
4. How much can I borrow?
   Federal Stafford loans are subject to annual limits that vary depending on your year in school and whether you are deemed a dependent or independent student.
   
   Under the Federal PLUS program, your parents may borrow up to the cost of attendance minus any aid you receive.
   
   
5. Are there any fees attached to any of the Federal loan programs?
   Yes. There are two fees that may be deducted out of the funds borrowed. One is an origination fee that is mandated by Federal law. The fee is 1 percent of the principal amount of the loan. This fee will be reduced one-half of a percent every year until July 1, 2010.
   
   The other fee is an insurance premium or guarantee fee. This fee is also set by Federal law and may not exceed 1 percent of the principal amount of the loan. These fees apply to both Federal Family Education Loan Program (FFELP) loans provided by private lenders.
   
   Check with your lender or guarantor to see if these fees are waived.
   
   
6. When and how will I receive my money?
   There are several ways to receive funds. One way is through an electronic funds transfer (EFT), which allows a lender to transfer the proceeds of your loan directly to an account held by your school and subsequently to your student account.
   
   Another way is by paper check made payable to you and your school and sent directly to your school for endorsement.
   
   You should check with your school's financial aid office to see when your loan funds will be delivered.
   
   
7. When will I be required to pay back my loan?
   Repayment terms depend on the type of loan you receive.
   
   With a subsidized Federal Stafford loan, repayment of principal, with interest, begins six months after you cease to be in school on at least a half-time basis.
   
   If you receive an unsubsidized Stafford loan, you must pay the interest on the loan as it accrues unless you make arrangements with your lender to let the interest accumulate and be added to your principal balance. This is called capitalization. Repayment for the unsubsidized loan does not begin until six months after you cease to be enrolled on at least a half-time basis.
   
   Repayment of Federal PLUS loans begin within 60 days of the full disbursement unless you make arrangements with your lender. In-school deferments are available.
   
   
8. How much will my monthly payments be?
   The amount will depend on the interest rate on your loan, the total amount of loans you have outstanding, and the type of repayment schedule you choose.
   
   To give you an idea of how much you might be paying on a monthly basis, use the Loan Repayment Calculator. Also, to see how much income you need to repay the loan, use the Debt/Salary Wizard
   
   
9. After a loan application is submitted, how long does it take to receive the loan proceeds?
   You should check with your school's financial aid office to see when your loan funds will be disbursed.
   
   Keep in mind, though, that errors contained on the loan application can slow down the processing time.
   
   Additional factors that may vary the length of time it takes to process a loan include:

   whether the school you are attending processes financial aid electronically or by mail, if loan funds will be sent to your school by electronic funds transfer (EFT) or paper check, and whether you have chosen a lender that participates with SLGFA's disbursement services.

10. What is a guarantee agency and what does it do?
    Guarantee agencies insure the loans against default. If the borrower defaults, dies, or becomes totally and permanently disabled, the guarantee agency reimburses the lender for the balance on the remaining loan.
    
    Guarantee agencies also provide a variety of information and resources, including consumer brochures, toll-free consumer hotlines, and helpful websites. SLGFA has a Student Resource Center that includes a computer lab and a private consultation office staffed by our friendly and knowledgeable employees. 
    
    Most guarantors serve students, parents, schools, and lenders in a particular state; however, some guarantors operate on a regional or national basis.
    
    
11. Are there any loans, grants, or scholarships available to students who have already completed their training?
    Not in regard to Federal Family Education loans or other types of Federal Title IV aid, as these are only available for students enrolled at least half-time in an eligible program at an eligible institution.
    
    However, you should check with the financial aid office at the institution you attended to determine if there is any non-Federal financial aid available to students who have completed their course of study.
    
    For further financial aid information, you may wish to look at SLGFA's helpful links . You can access the U.S. Department of Education website and search on the Life Long Learning Tax Credit and employer-paid tuition.
    
    
12. What else do I need to know?
    Maintain accurate records. Keep copies of any document you send out and note the date and to whom the documents were sent.
    
    Stay on top of deadlines. They are very important and can vary from school to school and from state to state.
    
    Be prudent and follow up. Do not assume someone else is checking on your application for you. Make calls to your financial aid office and document those calls, including the time and date you made the call and who you spoke to.
    
    Learn as much as you can from the available resources. Ask your guarantor , your lender , or your school's financial aid office any questions you have. SLGFA also provides helpful links to assist you in finding the information and help you need.
    
    Don't give up. There are a lot of options available to you and your family. By taking the time to explore your choices, you will be well on your way to your goal of obtaining or continuing a higher education.
    
    
13. Why is my loan scheduled to be disbursed in two separate payments?
    Federal regulations require schools to disburse Federal Family Education Loan Program (FFELP) loans in two separate disbursements. The second disbursement may not occur before the midpoint date of the loan period or must coincide with the beginning of a payment period (such as the beginning of a semester).
    
    Typically, a semester-based school will deliver the first disbursement of a fall/spring loan at the beginning of the fall semester. The second disbursement of the loan will be delivered to the student at the beginning of the spring semester.
    
    
14. Who do I contact to change my name, address, and/or phone number?
    You should contact your lender . You can also call SLGFA's Caller Information and Assistance Department.
    
    
15. I forgot who my lender was last year. Who do I contact to find out?
    SLGFA's Caller Information and Assistance Department can help you.
    
    
16. I forgot how much I borrowed and from whom. How can I get this information?
    Call SLGFA's Caller Information and Assistance Department.
    
    
17. I am in my final year of school. How much can I borrow?
    Schedule an appointment with your financial aid officer at your institution to discuss your aid eligibility as several factors determine how much you may borrow in your final year of study.
    
    You'll be subjected to an annual loan limit and a maximum aggregate (cumulative) loan limit .
    
    Your grade level determines the loan amount a school certifies. Additionally, the school must determine your cost of attendance and other aid that you will receive.
    
    
18. Are there restrictions on how I use my loan money?
    Yes. Proceeds from the Federal Family Education Loan Program (FFELP) must be used for education-related expenses like tuition, fees, books, room and board, etc.
    
    
19. Is it possible for SLGFA to e-mail the status of my student loan to me?
    Yes. Whether you need to check on when your loan will enter repayment or whether your loan is delinquent, your loan status can be e-mailed to you. However, you need to check with your school's financial aid office to determine when your loan funds will be disbursed.
    
    Your status can be sent directly to your e-mail address. Please keep in mind that when submitting a request, you should not disclose your full social security number.
    
    
20. What if I have a dispute about my student loan?
    If you have a dispute about your student loan, contact the Caller Information and Assistance Department.
    
    
21. If I transfer schools, will my student loans automatically transfer?
    No. Your current school will not transfer your loans automatically. If you are considering transferring, discuss this with your lender, the financial aid office at your current school, and the financial aid office at the school you intend to transfer to.
    
    
22. Can I get a refund if I do not complete the school term?
    If you are eligible, yes. Every school is required to have a refund policy.
    
    Before you enroll, you should obtain a copy of the school's refund policy. If you withdrew and are eligible for a refund, the school will send the refund to the holder of your loan, who will apply to the refund to the outstanding balance of your loan.
    
    
23. What is a servicer?
    A servicer is the institution or business that manages a lender's student loan portfolios, including billing, inquiries, etc.
    
    SLGFA's participating lender list includes servicer information.
    
    
24. What is loan servicing?
    Some lenders and secondary markets employ services to manage their student loan portfolios. Unlike a loan that has been sold, under servicing, the lender retains ownership of its loans but contracts administrative functions, such as billing, inquiries, etc.
    
    Whether your loan is serviced by your original lender, a secondary market, or a servicing contractor, maintain close contact with the appropriate party.
    
    
25. How do I make payments?
    Lenders use different methods. Most commonly, borrowers are issued coup books or monthly statements.
    
    Some lenders may be able to automatically withdraw payments from your checking account. If the lender offers you a choice of payment options, choose the one that is most convenient for you.
    
    
26. Will I always make my payments to the same lender?
    Not necessarily. Sometimes, lenders sell loans to other lending institutions or secondary markets. This frees up capital so the lender can make more student loans.
    
    If your loan is sold, you will be notified and given instructions for making payments. After such notification, make all subsequent communications with this new holder of the loan.
    
    The sale of your loan does not affect the amount you will pay or the terms of repayment, provided you do not default on your loan obligation.
    
    
27. What if I can't make my payments?
    Contact your lender for help as soon as problems arise or contact SLGFA's Default Prevention Department for assistance.
    
    Lenders realize that borrowers may have financial problems from time to time. A borrower who is genuinely unable to make payments but sincerely wishes to honor the Federal loan obligation will find the lender to be cooperative.
    
    It is in no one's best interest for borrowers to default . The worst thing you can do is fail to make a payment without explanation. You may be entitled to deferments or forbearances that temporarily suspend or reduce your payments during financial hardship.
    
    
28. What happens if I fall behind on my payments?
    If you fail to make timely payments and your account becomes 270 days delinquent (or 9 months/payments), you will be in default .
    
    Your account will be assigned to a guarantor for collection. Your default will be reported to a national credit bureau and will become part of your credit record, making it difficult for you to get other types of credit.
    
    To avoid the serious consequences of default, SLGFA provides a number of helpful tools so you can manage your debt: Budget Calculator , Loan Repayment Calculator , Debt/Salary Wizard.
    
    
29. I am currently paying back my loan, but the payments are too high and I'm having difficulty making the payments on time. Is there anything I can do to get my monthly payments lowered?
    Yes. You should contact your lender or servicer and ask about the various repayment options available for FFELP borrowers. You may also qualify for a deferment or forbearance.
    
    Additionally, SLGFA's Caller Information and Assistance Department can assist you in any way. It is very important to remain current on your loan repayment obligations, so please call your lender or SLGFA as soon as possible.
    
    
30. I work in an impoverished district. Is it possible for me to get a deferment or might I qualify for student loan forgiveness
    Possibly. The Higher Education Amendments of 1998 provided for a loan forgiveness program for borrowers who are not in default and who have been employed as full-time teachers for 5 consecutive years in a school that qualifies for cancellation.
    
    The amount forgiveness cannot exceed $5,000 of the aggregate loan amount that is outstanding after completion of the fifth complete year of teaching. The five-year period only applies to any new Federal Stafford loan borrower (as defined in Federal regulations as a borrower who did not have an outstanding loan balance on October 7, 1998).
    
    The U.S. Department of Education publishes a list each year that designates on a state-by-state basis the schools at which a borrower may teach during the school year to qualify for deferment or cancellation benefits. 
    
    
31. I know I have to repay my loan even if I leave school because I'm dissatisfied with my program of study. Who do I contact to discuss my concerns?
    You must contact the guarantee agency for your loan. SLGFA's Caller Information and Assistance Department can help or you can call the U.S. Department of Education's Inspector General's Office at 800-647-8733.
    
    
32. If a borrower dies or suffers a serious, debilitating accident, who is responsible for repaying his or her loan?
    The guarantor pays the loan in full after the holder of the loan (lender or servicer) files a claim for payment in the event of a borrower's total and permanent disability or death. However, please keep the following in mind.
    
    A borrower who is subjected to total and permanent disability must provide the lender and the government with a physician's certification of the disability for review. Please see loan discharge and cancellation forms .
    
    If a borrower dies, the lender must receive a copy of the death certificate or other proof of death acceptable under applicable state law.
    
    
33. When a borrower defaults on a student loan, does the guarantor collect payments on just the principal, or is the borrower still obligated to pay the interest?
    The borrower is still obligated to pay the interest, and a defaulted student loan continues to accrue daily interest. Also, a 25 percent collection charge on the principal and interest is added to the balance owed by the borrower.
    
    Defaulting on student loans has very serious consequences. Defaulted loans may be subject to collection by IRS tax refund offset, wage garnishment, a collection agency, or legal proceedings. Additionally, you may be ineligible for deferments and additional student aid, hindering your ability to find a job and damaging your credit record.
    
    
34. What is loan consolidation?
    Most Federal student loans and Federal Family Education Loan (FFEL) PLUS loans can be consolidated into a Federal Consolidation Loan, so that you only receive and have to make one monthly payment. If the interest rate for each loan varies, the total interest is averaged.
    
    
    
35. How do I determine if I should consolidate?
    You should contact SLGFA's Caller Information and Assistance Department to see if consolidation is an option for you.