Loans
Loans are an invaluable resource for many students and their families to finance a college education. Loans allow students to postpone paying a portion of their cost of
education.
Federal Perkins Loans are awarded by the Institute to students with demonstrated financial need. No interest is charged on the loan while a student maintains at least half-time academic enrollment. Repayment begins nine months after leaving school or dropping below half-time status. Interest is then charged at a rate of 5% on the unpaid balance. Federal Perkins Loans are limited to a total of $4,000 annually during undergraduate study, a total of $20,000 for all years of undergraduate study, and a maximum of $40,000 for the entire undergraduate and graduate career. Students may be allowed up to ten years to repay, based upon the amount they have borrowed. Information concerning deferment, repayment, postponement, and cancellation will be provided on each borrower’s loan promissory note and in a disclosure statement given to students prior to disbursements of the loan.
The Federal Perkins Loan Program doesn’t have a variety of repayment plans. Your monthly payment amount will depend on the size of your debt and the length of your repayment period. The minimum monthly payment is generally $40, however.
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Total Loan Amount
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Number of Payments
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Monthy Payment
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Total Interest Charges
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Total Repaid
|
|
$3,000
|
90 |
$40 |
$604.55
|
$3,604.55
|
|
$5,000
|
119 |
$53.06 |
$1,363.40
|
$6,363.40
|
|
$15,000
|
119 |
$159.16 |
$4,090.85
|
$19,090.85
|
Caltech and Institute Loans are made from funds provided by many sources, and are used to supplement the Institute’s Federal Perkins Loan funds. Generally, no interest is charged and no repayment of principal is required while a student maintains a continuous course of study as an undergraduate at Caltech. Repayment begins nine months after leaving school or dropping below half-time status. For Caltech Loans, interest is then charged at a rate of 5% on the unpaid balance until the loan has been repaid in full. As with Federal Perkins Loans, if the student transfers to another institution or attends graduate school, here or at another institution, no payments need be made on the principal or interest as long as half-time attendance is maintained. More specific information is provided to each borrower on the promissory note and in a disclosure statement given to students prior to disbursement of the loan.
Other Loans
Emergency Loans may be available to students regardless of their eligibility for financial aid. The Hoover Loan Fund enables students to borrow small sums of money to cover unforeseen emergencies. These loans are usually payable within the same academic year and are administered by the Dean of Students on a case-by-case basis. Additional information and applications may be obtained from the Dean of Students’ Office.
The William D. Ford Federal Direct Student Loan Program is an opportunity for students to borrow money from the Federal Government to pay for a Caltech education. Under this program, the U.S. Department of Education makes loans, through Caltech, directly to students. Caltech will use the William D. Ford Federal Direct Loan to pay tuition and fees, as well as room and board charges, and will give any remaining money to the student for personal expenses. William D. Ford Federal Direct Loans simplify loan repayment—payments go directly to the Federal Government.
The Federal Direct Stafford Loans The Federal Direct Stafford Loans (subsidized and unsubsidized) are available to both graduate and undergraduate students. The Federal Government "subsidizes’’ a loan by paying the interest while the student is in school, during the grace period, and during periods of deferment. For an unsubsidized loan, the Government does not provide the subsidy; therefore, interest on the loan accrues during those periods. The calculated family contribution is taken into consideration when determining a student’s need for a subsidized loan. To determine eligibility for an unsubsidized loan, the family contribution is not considered. Other than these two differences, the provisions of the Federal Direct Stafford Loan Program apply to both subsidized and unsubsidized loans (i.e., loan limits, deferment provisions, etc.).
Before Caltech can determine loan eligibility, a determination of the student’s eligibility for a Federal Pell Grant must be made. In order to make this determination, the applicant must complete a Free Application for Federal Student Aid (FAFSA).
Subsidized Federal Direct Stafford Loans may not be used to substitute for the Federally calculated expected family contribution; however, Federal Direct Unsubsidized Stafford Loans may be used in this capacity. Before a student can apply for a Federal Direct Unsubsidized Stafford Loan, eligibility for a subsidized loan will be determined. To reiterate, Federal Direct Unsubsidized Stafford Loan borrowers are not required to demonstrate need in order to be eligible. However, if the student is eligible for a Subsidized Federal Direct Stafford Loan, he or she will be awarded that loan first, and this award will be taken into consideration when determining eligibility for the Federal Direct Unsubsidized Stafford Loan. The amount borrowed under the subsidized and unsubsidized loans combined may not exceed the annual/aggregate loan limits, or the total cost of education.
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Maximum Loan Amount for a Full Academic Year
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||
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Year in School
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Dependent Student: Maximum combined subsidized and unsubsidized Federal Direct Stafford Loan
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Independent Student: Maximum combined subsidized and unsubsidized Federal Direct Stafford Loan
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1st year undergraduate
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$3,500
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$7,500
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2nd year undergraduate
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$4,500
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$8,500
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3rd & 4th year undergraduate
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$5,500
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$10,500
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Graduate/Professional
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N/A
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$20,500 |
Aggregate loan amounts are $23,000 for dependent undergraduates, $46,000 for independent undergraduates, and $138,500 for graduate and professional students, (including Stafford amounts borrowed as an undergraduate).
participate in Entrance Counseling via the web www.ed.gov/directloan/. Further, loan disbursements for first-time, first-year undergraduate borrowers may not be released to the student until he or she has been enrolled in his or her program of study for at least 30 days. The interest rate for new loans is fixed at 6.8%. To offset the federal government’s cost of the program the borrower must pay an up-front origination fee of up to 3% of the principal amount of the loan.
Federal PLUS Loan Program Under the Federal Direct PLUS Program, parents of dependent undergraduate students and graduate or professional students may borrow up to the difference between the cost of attendance and all other financial aid, for that student. Federal Direct PLUS loans are available to parent borrowers who have “no adverse credit history” as determined by the Secretary of Education. Federal Direct PLUS loans may be used to replace the expected family contribution. There is no cumulative maximum limit that can be borrowed under the Federal Direct PLUS program. Federal Direct PLUS loan funds are credited to the student’s account and must be disbursed in at least two installments.
The interest rate on Federal Direct PLUS loans disbursed on or after July 1, 2006 is fixed at 7.90%. There is no federal interest subsidy on Federal Direct PLUS Loans and the government is authorized to charge the borrower an up-front origination fee of up to 4% to offset the Federal government’s cost of the program.
Unless the parent or graduate student borrower qualifies for one of the deferments under the Federal Direct Stafford Loan Program, repayment of principal and interest must begin within 60 days after the final loan disbursement for the period of enrollment for which you borrowed. Parent borrowers who qualify for deferment may pay interest only, beginning 60 days after disbursement, unless interest is capitalized (i.e., deferred and added to the loan principal). Graduate student borrowers who are enrolled at least half-time are eligible for an in-school deferment.
Applications for Federal Direct PLUS loans are available from the Caltech Financial Aid Office. Applications must be returned to the Financial Aid Office for eligibility certification and processing.
Repayment
Under the Direct Loan program, borrowers have four types of repayment plans available:
The plans vary in a number of ways to meet the different needs of individual borrowers. For more information on these plans and suggestions on how to choose among them, review the comparison chart.
Loan Consolidation
After July 1, 2006, consolidation loans will no longer be available to students while they are in school. Consolidation allows the borrower to extend his or her repayment term, reduce his or her monthly payments, and work with a single lender instead of several different lenders. For more information on a Direct Consolidation Loan, contact the Consolidations Department of the Direct Loan Consolidation Department at 1-800-557-7392 or via the web at: loanconsolidation.ed.gov
Loan Deferments
Once the borrower is no longer enrolled at least half-time in college and a six-month grace period has ended, loan repayment for Federal Direct Stafford Loans may be deferred
- during any period in which one is pursuing at least a half-time course of study as determined by the institution;
- during any period in which the borrower is pursuing a course of study under an approved graduate fellowship program or rehabilitation training program for disabled individuals;
- for up to three years during periods in which one is actively seeking but unable to find full-time employment;
- for up to three years for any reason, which Caltech determines, that has caused or will cause the borrower to have an economic hardship.
Unlike the Federal Perkins Loan program, which provides for a nine-month grace period following each period of statutory deferment, there are no post-deferment grace periods for Federal Direct Stafford Loans.
More specific information of repayment and deferments are included in the loan promissory note and the loan disclosure statement provided to student borrowers.
The Student Financial Assistance (SFA) Ombudsman works with student loan borrowers to informally resolve loan disputes and problems. The Office of the Ombudsman helps borrowers having problems with the following federal loans:
- Direct Loans—Subsidized and Unsubsidized Direct Student Loans, Direct PLUS Loans, and Direct Consolidation Loans;
- Federal Family Education Loans—Subsidized and Unsubsidized Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans;
- Guaranteed Student Loans, SLS Loans, and
- Perkins Loans.
The Ombudsman resolves disputes from a neutral, independent viewpoint. The SFA Ombudsman will informally conduct impartial fact-finding about borrower complaints. The Office will recommend solutions, but they will not have the authority to reverse decisions. The Office of the Ombudsman will also work to bring about changes that will help prevent future problems for other student loan borrowers.
The Ombudsman will informally research your problem and determine if you have been treated fairly. If your student loan complaint is justified, the Office of the Ombudsman will work with you and the office, agency, or company involved in the problem. On your behalf, the Office will contact:
- Other offices within the U.S. Department of Education,
- Your private lender (banks, credit unions, savings and loan association, and others),
- Your loan guaranty agency, and
- The servicing agency or firm collecting your loan.
The Ombudsman is not an advocate or someone who will automatically take your side in a complaint. The Office of the Ombudsman must consider all sides in an impartial and objective way. Often, the process of finding all the facts of a complaint and explaining that information to all the parties involved leads to the development of reasonable and fair solutions. It is the Ombudsman's job to help develop fair solutions to complex and difficult problems.
If you need the assistance of the Ombudsman in order to resolve disputes or problems, contact the office at the address, phone number, or email address listed below:
U.S. Department of Education
FSA Ombudsman
830 First Street, NE.
Washington, DC 20202-5144
(202) 377-3800 toll free: (877) 557-2575
via fax: (202) 275-0549
via e-mail: fsaombudsmanoffice@ed.gov
Visit the Ombudsman website at: http://www.ombudsman.ed.gov