FINANCIAL AID OVERVIEW APPLYING FOR FINANCIAL AID AND LOANS In order to receive financial aid, you must apply for it every year. Please understand that applying for aid is not a commitment to accept it. For example, you may be eligible for $20,500 in federal Stafford Loans for the 2008-2009 academic year after you complete your 2008-2009 FAFSA, but you may only want to borrow $15,000 for the year. You may be pre-approved for $30,000 in a federal Graduate PLUS Loan when you try to see if you can qualify for this loan, but may only decide to borrow $20,000 after creating your budget for the year. You have the right & opportunity to reduce any loan that you have during the school year and also increase your loan amount (if applicable) if you need additional money and there is room in your financial aid budget. If you do not apply for aid for your first year, you may still do so for your second or third years. FAFSA (FREE APPLICATION FOR FEDERAL STUDENT AID) Please see the FAFSA Handout for additional details. Students should use their 2007 federal tax return to help complete their 20082009 FAFSA online at www.fafsa.ed.gov. Our school code is G40963. You will need a PIN number to electronically “sign” your FAFSA application online. If you do not have a PIN, you need to request one. Many loan lenders will also allow students to sign their loan applications electronically online using their FAFSA PIN. For the majority of students, completing the FAFSA each year will allow them to receive as much of the $20,500 in Stafford Loan eligibility as possible. FOUR MAIN STEPS TO ATTAIN FEDERAL STAFFORD LOANS 1. 2008-2009 FAFSA 2. Stafford Loan Master Promissory Note (MPN) with your chosen lender, hopefully completed and signed online at your lender‟s website 3. Federal Stafford Loan Request Form to be submitted to the Financial Aid Office 4. Online Entrance Loan Counseling directly online with your chosen lender (this is a requirement if this is your first time borrowing federal loans & recommended if you are borrowing Stafford Loans again) FIVE STEPS TO ATTAIN FEDERAL GRADUATE PLUS LOANS 1. 2008-2009 FAFSA 2. Pass a credit check and have no adverse credit as determined by your lender 3. Federal Graduate PLUS Loan Master Promissory Note (MPN) with your chosen lender, hopefully completed and signed online at your lender‟s website 4. Federal Graduate PLUS Loan Request Form to be submitted to the Financial Aid Office 5. Required online Entrance Loan Counseling session for Graduate PLUS Loans LOAN OPTIONS AND INFORMATION It is recommended that a student who needs to borrow loans, first borrow loans under the Stafford Loan program. If a student borrows all $20,500 in federal Stafford Loans and still needs money to pay school fees or provide refunds for living expenses, a student can look to borrow either a federal Graduate PLUS Loan or a Private/Alternative loan. Be aware that your loans can only be approved for up to your assigned cost of attendance budget minus other aid (scholarships and Veterans‟ Benefits). It is always best to borrow conservatively whenever possible. All loans are disbursed from the loan lender to the law school at the beginning of each semester. If you borrow loans, you w ill not begin repayments until after you graduate, withdraw, or drop below half-time. Students requesting federal Stafford Loans will need to submit a “Federal Stafford Loan Request Form” to the Office of Financial Aid. Federal Subsidized Stafford Loan Maximum of $8,500 per year Eligibility determined by the FAFSA EFC & need calculation by school Need-based, but is not based on credit history Fixed 6.8% interest rate with ability to reduce rate through lender incentives Government pays the interest on the student‟s loan while the student is enrolled and during any deferments Begin repaying loan 6 months after graduation, enrolled less than half-time, or withdrawal Federal Unsubsidized Stafford Loan Maximum of $20,500 (minus any Subsidized Stafford Loan eligibility) Eligibility determined by FAFSA Not need-based and is not based on credit history Fixed 6.8% interest rate with ability to reduce rate through lender incentives Interest begins when loan is disbursed & student is responsible for interest (Student can pay interest while enrolled to keep loan debt down or defer all payments until after student ceases to be enrolled at least half-time (7 hours) Loan repayment begins 6 months after graduation, enrolled less than half-time, or withdrawal Federal Graduate PLUS Loan Maximum loan can be equal to a student‟s cost of attendance budget (minus Stafford loans, scholarships, VA benefits, or other aid)
Students must file the 2008-2009 FAFSA in order to consider this loan Loan eligibility is determined by credit history, more specifically; a student must not have “adverse credit,” and may be approved with little to no credit history. Loan is not need –based Fixed 8.5% interest rate with ability to reduce rate through lender incentives Interest begins when the loan is disbursed to the law school each semester Loan repayment technically begins 60 days after the last disbursement of the year, but lenders grant students in-school deferment for Graduate PLUS Loans so no payments are due while enrolled in school. If you are unable to be approved by yourself, you can try to secure a credit-worthy co-borrower that will allow you to borrow the Graduate PLUS Loan. Lenders are required by law to assess at least a 3% processing fee that they keep before they send your loan disbursements to the school. *If you use this loan, you may want to request additional loan money to account for the lender‟s fees. (For example, if a student wants to “net” $30,000 in a Graduate PLUS Loan with Sallie Mae, the student should request $31,250 to account for the 4% in processing fees they deduct from your disbursements.
Private/Alternative Loans Maximum loan can be equal to a student‟s cost of attendance budget (minus Stafford loans, scholarships, VA benefits, or other aid) Loan eligibility determined by loan lender by running credit history and verifying the student‟s FICO score. Loan is not need –based. Private Loan will always have a variable interest rate for the life of the loan. Lenders will adjust the interest rate either monthly or quarterly based on their criteria (like the Prime rate or the 3-month LIBOR index). There is no limit to how low or how high your interest rate could go! Interest accrues when the loan is disbursed to the law school each semester Loan repayment will begin generally six or nine months after the student graduates or ceases to be enrolled at least half-time. If you are unable to be approved by yourself, you can try to secure a credit-worthy co-borrower that will allow you to attain your Private Loan. HOW TO CHOOSE YOUR LOAN LENDER Charleston School of Law participates in the Federal Family Educational Loan Program (FFEL) for federal Stafford and federal Graduate PLUS Loans. Students have the choice of using one of the many, many banks or lending institutions to use to borrow their loans. Here are some basic suggestions when you are choosing your lender: 1. Try to use the same lender for all of your possible loan needs. This limits confusion because you will send one payment for all your loans to your lender and also helps most students because it qualifies them for the lowest starting monthly payment because of a higher accumulation of loan debt with one lender. 2. Make sure the lender offers Stafford Loans, Graduate PLUS Loans, private loans, and bar study loans. Some lenders do not offer bar study loans, which would cause you to make a payment to another group as well as your lender. 3. Study the borrower benefits of your lender to learn how to reduce your interest rate and how choosing that lender may save you money. 4. Learn if the lender will charge origination fees, disbursement fees, or any fees that will cause you to not receive as much of your loan as you borrow. 5. If you do your research & find a lender that you like, but they have not been used at Charleston School of Law yet, it is vitally important that you confirm with them that they will allow you to borrow a loan to attend school here. Because we are a new school in the federal student aid program (November 2007), there are lenders who may not recognize our school code or who may not be able to lend to our students because the credit crunch has made lenders unable to add new schools to their lending portfolios. Our students have used SC Student Loan and also Sallie Mae for their loan needs over the past few years. They both offer all of the loans (Stafford, Graduate PLUS, private, and bar study loan) that our students may consider. Sallie Mae is the largest loan provider in the country and provides an array of financial products to assist you for life. Students do not need to be residents of SC to take advantage of SC Student Loan‟s great customer service and low Cohort Default Rate (CDR). CDR is the measure of how many students default on a lender‟s loans and SCSL has had one of the lowest rates in the country for years. Both lenders have pre-approval pages for their private loans and federal Graduate PLUS Loans. They allow students to complete their promissory notes (loan applications) and entrance loan counseling sessions online to expedite the process. Some differences in the two main lenders that students have chosen: Sallie Mae charges 1% to 1.5% for their Stafford Loan fees. Since the majority of students will elect to borrow all $20,500, this would mean you would receive $205 to $307 less in your loan money. At this time, SC Student Loan (SCSL) does not charge any fees for their Stafford Loans, so if you borrow $20,500, you will receive all $20,500 to apply toward your balance. For students borrowing a federal Graduate PLUS Loan, it is a federal rule that the lender must charge you a 3% processing fee based on your loan amount. SC Student Loan charges the 3%, but Sallie Mae charges the 3% and also a 1% fee so you will net less money if you borrow their loan. For students who borrow very conservatively, it may not make a big enough difference, but it makes a $200 to $300 difference if you are borrowing a $20,000 or $30,000 loan, respectively.
Both lenders have recently changed their Private Loans significantly. It is more difficult for students to attain private lo ans now because lenders have increased the criteria to be approved. Both lenders have also switched to interest rates based on the LIBOR Rate instead of the Prime Rate. Private loans are based almost completely on the FICO score. If your score is not high enough to qualify for a private loan, you can try to be approved with a credit-ready co-borrower. SC Student Loan has the Palmetto Assistance Loan (PAL) as their private loan. For students pre-approved for the PAL loan prior to June 1, the variable interest rate given was equal to the Prime Rate. For students approved on or after June 1, the PAL interest rate will be indexed from the 3-month LIBOR rate. Specifically, the variable interest rate would be the 3-month LIBOR plus 4.5% (currently 7.2%). Sallie Mae offers a variable interest rate structure for their private loans (LAWLOANS). Sallie Mae has just switched from the Prime Rate to the LIBOR Rate late last week and they have not provided the specific interest rate tier information yet. **This information is based on how their LAWLOANS were structured last year when they were based on the Prime Rate; however, this year‟s rates are pending based on information from Sallie Mae. Last year, students could receive a LAWLOAN at the „best‟ interest rate (Prime Rate minus .25%) if both the student and the co-borrower had excellent credit and high FICO scores. If a student applied alone & with wonderful credit, the best variable rate they could receive last year was Prime plus .25%. They offer different tiers where your variable interest rate will be determined by the credit score of the student (and co-borrower, if applicable). Students had variable interest rates with Sallie Mae based on “Prime Rate plus 2%” and as high as “Prime Rate plus 4.5%” which made their variable rate 12.75% because the Prime Rate being 8.25% in August 2007. ***You have the choice to pick any lender out there that will do business with us. Even if you find a good lender that indexes their private loans from the Prime rate (which would be a good, variable rate of 5%), you have to really think about the variable interest rate because there is no cap on how high that interest rate could climb in 2 years or 20 years. If you want to use Sallie Mae or SCSL, consider the federal Graduate PLUS Loan because that gives you a fixed interest rate that will not change. If you went for a private loan based on the LIBOR rate, the variable rate could actually be above the fixed rate if the economy changes and the LIBOR rate increases by 1.5% or more. Both lenders offer a .25% interest reduction if you elect to repay your loans through an automatic payment through your banking account. SC Student Loan will drop $750 of your loan based on your graduation with a JD. Hopefully, Sallie Mae will continue the UPromise benefit that allows students to pay down their loan debt by making purchases at certain stores, gas stations, etc. Because borrower benefits change so quickly, it is your responsibility to make an informed decision. Sallie Mae hopes to update thei r website (www.salliemae.com) after July 1 because the benefits that are listed now are incorrect and will be reduced considerably. SC Student Loan has updated their site (www.scstudentloan.org) and their borrower benefits are current for 2008-2009. If you have already completed loan paperwork with one lender & want to switch to another one, it is not too late. You will need to notify the Charleston School of Law‟s Office of Financial Aid in writing as to which lender you want to use so your loans with one group can be cancelled. The cancellation will allow for the Office of Financial Aid to certify (approve) your loans with the loan company you choose. COST OF LIVING (REFUNDS FOR LIVING EXPENSES) Each student‟s Cost of Attendance budget (regardless if the student is full-time or part-time) has direct fees such as law school tuition and fees and estimated costs that include housing and board, books and supplies, and personal/transportation expenses. The Department of Education will not allow the law school to include car payments and personal debt, including credit cards as part of the COA budget. The cost of living budget is listed below: $ 9,900 $ 6,300 $ 1,250 $17,450 Housing and Board Transportation/Personal Books/Supplies *Cost of living budget
For students who borrow as much as possible in loans, the $17,450 cost of living allotment will provide an estimated $8,725 refund per semester. No matter what your refund will be, it is incredibly important for you to budget wisely! *Students may appeal if they have purchased a laptop and/or printer for school, have daycare expenses during classes, or have expenses associated with a disability. Students may submit a “Request for Budget Increase Form” along with receipts or documentation to the Director of Financial Aid so their appeal may be considered. A successful appeal would increase the student‟s COA budget to allow a private loan or Graduate PLUS Loan to be attained to help with those expenses. Should you have additional questions or concerns, please contact the Office of Financial Aid for assistance. Mike Parrish Director of Financial Aid (843)377-4901