LOANS

TYPES OF FINANCIAL AID
WAYS TO PAY FOR COLLEGE
LOANS

There are many ways to pay for your college education. It is important for students and parents to do the research to choose the best financial option for managing college expenses.

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DIFFERENT COLLEGES DEFINED
TYPES OF COLLEGES

Have you thought about what type of school you would like to attend?

We are here to help you sort it all out. Check out the four primary types of colleges to see which one will be the best fit for your future education.

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FEDERAL EDUCATIONAL LOANS

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Federal student loans, whether they are in the student's name or the parent's name, are borrowed money that must be repaid with interest. Students should consider Federal Direct Subsidized and Unsubsidized Loans prior to turning elsewhere for loans.  Federal loans offer some unique benefits for students, such as not requiring a cosigner.

FEDERAL SUBSIDIZED

Subsidized loans are awarded to undergraduate students who can prove financial need whereas unsubsidized loans are not based on financial need. 

The federal government pays the interest on all Direct Subsidized Loans while the student is in school, during the grace period after leaving school, and during any periods of deferment thereafter.

FEDERAL UNSUBSIDIZED LOANS

For unsubsidized loans, students are responsible for repaying all of the interest that accrues during school, although payments are not required while a student is in school. 

ABOUT FEDERAL EDUCATION LOANS
RATE FOR 2022 -2023 ACADEMIC YEAR 
  • 3.73% for undergraduate students.

  • 5.28% for graduate students.

  • Rates are fixed and are set every May for the upcoming academic year. 

FEES
  • 1.057% as of Oct 1, 2021.

ELIGIBILITY
  • U.S. Citizen/Permanent residents; full/part-time undergrad/grad student; need-based.

AMOUNT
FOR DEPENDENT STUDENTS
  • 1ST YEAR: $5,500 (no more than $3,500 can be subsidized).

  • 2ND YEAR: $6,500 (no more than $4,500 can be subsidized).

  • 3RD YEAR+: $7,500 (no more than $5,500 can be subsidized).

  • Dependent undergraduate student may not borrow more than $31,000 over all years (no more than $23,000 of this amount may be in subsidized loans).

FOR INDEPENDENT STUDENTS
  • 1ST YEAR: $9,500 (no more than $3,500 can be subsidized).

  • 2ND YEAR: $10,500 (no more than $4,500 can be subsidized).

  • 3RD YEAR+: $12,500 (no more than $5,500 can be subsidized). 

  • Independent undergraduate students may not borrow more than $57,500 over all years (no more than $23,000 of this amount may be in subsidized loans).

FOR GRADUATE & PROFESSIONAL STUDENTS
  • Borrow up to $20,500 in unsubsidized funds per year.

  • Cannot borrow more than $138,500 for all years. 

REPAYMENT TERM
  • Up to 10 years.

GRACE PERIOD
  • 6 months

LEARN MORE
HOW TO APPLY

Complete the FAFSA by your school's specified deadline.

LEARN MORE ABOUT FAFSA

FEDERAL PLUS LOANS

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Federal Plus Loans are for parents and graduate students funded and administered by the U.S. Dept. of Education.

ABOUT FEDERAL PLUS LOANS
RATE FOR 2022 -2023 ACADEMIC YEAR 
  • Fixed at 7.54% for the 2022/23 academic year.

  • Rates are fixed and are set annually in May for the upcoming academic year. 

FEES
  • 4.228% as of Oct 1, 2020.

ELIGIBILITY
  • U.S. Citizen/permanent resident; parent of full/part-time, parent of the dependent undergraduate student; graduate student.

  • A credit check is required.  

AMOUNT
  • Up to the difference between college costs and financial aid received.

REPAYMENT TERM
  • Up to 10 years for a standard repayment term.

  • Loan repayment begins within 60 days after final disbursement.

  • Parents can choose to defer payments until up to 6 months after the student leaves school or drops below half-time status.

  • Interest accrues during this period and can be paid monthly, quarterly, or will be capitalized.

  • Payments can be deferred for graduate students until graduation.

  • Forbearance options are also available.

MINIMUM PAYMENT
  • $50/Monthly

LEARN MORE
HOW TO APPLY
  • Complete the FAFSA by your school's specified deadline.

  • You will also need to complete an application, known as a Master Promissory Note, to accept your award.

LEARN MORE ABOUT FAFSA

 

STATE-BASED EDUCATION LOANS

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State-based loans are offered through a network of non-profit lenders, such as RISLA. 

ABOUT STATE-BASED EDUCATION LOANS

State-based loans often offer rates lower than the Federal PLUS Loan and may be in the student or parent's name, depending on the program. If the loan is in the student's name, a cosigner will likely be needed, but some programs have cosigner release options. 

RATES 
  • Rates vary from program to program and are often very competitive.

  • Programs offered usually include Undergraduate, Graduate, and Parent Loans.

ELIGIBILITY
  • A credit check is required.  
AMOUNT
  • Loan limits vary by program.
REPAYMENTS TERM
  • Repayment terms vary by program.
HOW TO APPLY
  • Complete application with the lender.


 

ATTENDING A COLLEGE IN RHODE ISLAND
  • If you live in Rhode Island or are planning to go to college in Rhode Island, check out RISLA'S Educational Loan options. VISIT RISLA.COM

  • If you are a non-resident, you should check to see if there is a state-based program in your state of residency.  RISLA also offers low fixed rates to students who do not reside or attend school in Rhode Island.

PRIVATE EDUCATION LOANS

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Private loans are offered through banks and other lending organizations. Like most bank loans, student loans have either a fixed or a variable interest rate.  Rates are often based on your credit so don't be fooled into thinking that the lowest advertised rate is what you will receive, unless you have excellent credit. 

ABOUT PRIVATE EDUCATION LOANS
RATES 
  • Rates vary from lender or bank and are often very competitive.

  • Rates can be variable or fixed interest rate.

ELIGIBILITY
  • A credit check is required. 

  • Cosigner is often required.

AMOUNT
  • Loan limits vary by program.

REPAYMENTS TERM
  • Repayment terms vary by program.

HOW TO APPLY
  • Complete application with the lender.

 

INSTITUTIONAL EDUCATION LOANS

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Institutional loans are a type of financial aid that colleges lend directly to their students. These can help students or their parents fill the gap between the federal aid they are eligible to receive and the cost of attendance.

ABOUT INSTITUTIONAL EDUCATION LOANS
INSTITUTIONAL LOANS
  • Institutional loans are non-federal aid provided by the borrower’s school.

  • These loans typically do not offer the same benefits as federal loans.

  • The loan servicer may be the borrower’s school or an agency hired to service the loan.

  • Repayment options and interest rates differ by school.

  • Borrowers with institutional loans should contact their school or loan servicer for information about loan options.

HOW TO APPLY
  • Students and their families are encouraged to check with the college or university they plan to attend to learn about the possible availability of institutional loan funds

 

FACTORS TO COMPARE EDUCATIONAL LOANS

Here is a list of things you should be looking at when comparing the above loan types to ensure you get the best option for your personal circumstances. 

APR

APR

The Annual Percentage Rate is a rate that expresses the total cost of a loan, including the interest rate, and any fees. You can use the APR to get a better side-by-side comparison of loans than looking at the interest rate alone. Federal student loans are exempt from APR disclosures.

 

COSIGNERS

COSIGNERS

Most non-federal loans will require a cosigner. If there is no cosigner on the loan, the interest rate is typically higher. If you are the cosigner on a student loan, make sure you understand your obligation and read the fine print before you sign the promissory note. 

 

DEFAULT

DEFAULT

Federal student loans are declared in default if payments are more than 270 days past due.

Private student loans can default as soon as four monthly payments (120 days) are past due.

 

DEFERMENT

DEFERMENT

Can the loan be deferred while in school? What is the maximum amount of time the loan can be deferred?

Deferring payments while in school increases the total amount you pay over the life of your loan so if you can make payments now, do it! 

 

FEES

FEES

Make sure you understand what fees are involved with the loan.  Is there an upfront fee, sometimes called an origination or application fee, default fee, or repayment fee?

What are the back-end fees, such as those for returned payments, late payments, and defaults?

While you don't want to plan on being delinquent on your loan, it is good to know how it will affect you should unfortunate circumstances prevent you from making payments as agreed. 

 

FORBEARANCE

FORBEARANCE

It is important to find out what the forbearance procedures are and how much time you can get if you can't make payments due to your financial circumstances. 

 

INTEREST RATE

INTEREST RATE

What is the interest rate on the loan? Is the rate fixed or variable? A lower rate is better, but be careful to pay attention to other factors too. 

A low rate on a variable rate loan may not be low in a few years when entering repayment. Assess your family's appetite for risk before taking on a variable rate loan, and make sure you understand how the index that rates are based on can change over time. 

MONTHLY PAYMENTS

MONTHLY PAYMENTS

Find out the estimate of what your payments will be based on the amount you are considering borrowing. Take into account all four years of borrowing when determining if the monthly payment amount will be affordable.

Remember to check the rate type. The estimate for a variable rate loan is just that, an estimate, and as the rate changes, so will your monthly payment. 

 

REPAYMENT TERM

REPAYMENT TERM

How long will you have to repay your loan? A shorter term typically results in fewer finance charges, but a higher monthly payment.

A longer repayment term will cost you more in the long run but may make your monthly payments more manageable. 

 


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COLLEGE PLANNING CENTER

Students and families can be overwhelmed with planning and how to pay for college.  We have experienced counselors that offer one on one assistance helping families understand all their options start to finish.

EDUCATION LOANS

We have been offering low cost, fix rate education loans for almost 30 years.  Helping students and families borrower responsibly to help achieve their higher education dreams.

REFINANCE

Refinancing may help you simplify and save when repaying student loans.  Combining outstanding balances, and securing a low interest rate with RISLA may reduce your overall repayment amount and possibly your monthly payment.

EMPLOYER REPAY

Employer Student Loan Repayment assistance is a tax-free benefit allowing employers to contribute towards the repayment of employee student loans.  This newest in-demand employee benefit helps reduce financial stress for employees while increasing retention and loyalty to employers.