When should I consider a loan?
First, make sure that you have applied for all the potential free financial aid (scholarships and grants) that you are eligible for:
- Complete the FAFSA (www.fafsa.ed.gov)
- Apply for Named (Donor) Scholarships between December 1 and February 1 (www.calvin.edu/go/namedscholarship)
- If a Michigan resident, file the FAFSA by March 1 in order to be eligible for consideration
- Apply for Outside Scholarships (www.calvin.edu/go/morescholarships)
- Use your own and your parent(s)/guardian(s) available and discretionary resources
- Work in the summer and during the course of the academic year to provide for your expenses while balance your study and social time
- Understand the terms of a loan before accepting a loan (interest rate and origination fee)
What loans are available to a student?
Federal Direct Student Loans are offered to every student that files the FAFSA. The types and amounts of federal loans are determined by the student’s need level and class level. Federal student loans have fixed interest rates, are deferred payment until six months after graduation, and a portion can be interest-free (subsidized as opposed to unsubsidized) while enrolled at least half time. Freshmen can receive up to $5,500, sophomores can receive up to $6,500, and juniors and seniors can receive up to $7,500. Independent students can be eligible for additional unsubsidized loans. Interest rates have recently been in the 4% – 5% range. The origination fee for these loans is about 1% and will be deducted from the proceeds of the loan. More information can be found at www.calvin.edu/go/loans.
For the subsidized Federal Direct Loan, the federal government pays the interest on the loan while a student is in school at least half-time (six credits or more per term at Calvin). You are not responsible for any interest on the loan while in school at least half-time.
For the unsubsidized Federal Direct Loan, you are responsible for the interest on the loan from the date that loan funds are disbursed to your account. While you are in school, you can choose to pay the interest on a quarterly basis, or you can choose to have the interest capitalized or added to the loan principal. If you choose this option, you will pay more overall since you will be paying interest on interest when you begin repayment of the loan principal six months after you graduate or drop below half-time status.
Students can also apply for private loans (sometimes referred to as alternative loans) from a bank or other lending institution. These loans often require a U.S. citizen co-signor with good credit. Interest rates are often higher than federal student loans (7% – 14%) and are dependent on credit and risk. You can reference Calvin’s lender list (those that have provided good customer service and product to past Calvin students) at the Private Loan section at www.calvin.edu/go/loans. There is also a tool that students can use to compare various private loan options.
Calvin’s trusted private loan lenders:
Do I have to accept all the federal loans I am offered?
No. If you file a FAFSA, you will be offered a loan that is the maximum amount for which you are eligible. You can choose to reduce that amount or not accept any amount. Your decision does not impact other aid you have received.
Are loans available to parents?
Yes. There is a Federal PLUS loan available to help parents finance their portion of the family contribution as well as private parent loans available from reputable banks. Parents can typically borrow up to the amount of the student’s full cost of attendance (including books, supplies, transportation) less all financial aid a student is receiving. Federal PLUS loans are considered unsubsidized, meaning interest accumulates on the loan starting from the date the loan funds are disbursed. Recent interest rates for the Federal PLUS loan are in the 7% range. An origination fee for this loan is about 7% and will be deducted from the proceeds of the loan. Private parent loans vary in interest, fees and terms, and should be considered and compared when considering a Federal PLUS loan.
A Federal PLUS loan can be denied. If the parent applies for and is denied, the student is then eligible for an additional unsubsidized Federal Direct Loan. Freshmen and sophomores can borrow up to $4,000 and juniors and seniors can borrow up to $5,000 in addition to the original amounts that they received.
The Financial Aid Office assists students and parents with available amounts and determining the cost of attendance. Parents can find loan resources at: www.calvin.edu/go/loans.
Financial Aid Office contact information:
Email: finaid@calvin.edu
Phone: (616) 526-6134 or 1 (800) 688-0122
Resources:
https://calvin.edu/offices-services/financial-aid/types/loans/
Calvin NEXUS Financial Coaching 