Federal Student Loan Borrower Disclosure
Your financial aid award letter displays the maximum amount of federal and state grants you are eligible for, before listing your federal student loan eligibility. Available institutional scholarship, based on financial need as determined by the Free Application for Federal Student Aid (FAFSA), is also packaged before federal student loans.
The first loan to be packaged is the Federal Perkins loan, which has an interest rate of 5%, subsidized (paid by the government while you are in school, in grace, or other deferment periods). For 2013-14, the Federal Perkins loan is awarded when the FAFSA EFC is below $7,000 and the amount is $2,000 for Maharishi International University undergraduate students, and $400 for graduate students.
The second loan to be packaged to each student is the Federal Direct Subsidized loan, which has an interest rate of 3.4% for undergraduate loans disbursed during 2013-14. The limits of loan eligibility are as follows: $3,500 for a first year student, $4,500 for a second year student, and $5,500 for a third/fourth/fifth year undergraduate student.
Note that the amount shown on your award letter is after fees have been subtracted. Fees are kept by the Direct Loan Servicing Center. For example, the Direct Subsidized loans have a 1.051% origination fee. The origination fee is subtracted from your loan before it is displayed on the award letter. For example a first year undergraduate student may be eligible for a $3,500 loan but the award letter shows the disbursed amount of $3,464.
The interest rates for Federal Subsidized loans borrowed in prior years are as follows: 3.4% since 2011-12, 4.5% during 2010-11, 5.6% during 2009-10, 6% for undergraduate loans borrowed during 2008-09; 6.8% for loans borrowed during 2007-08 and 2006-07; and for loans borrowed between July 1, 1998 and June 30, 2006 the interest rate is variable, set each July 1, currently 2.36% during repayment.
The third federal student loan packaged is the Federal Direct Unsubsidized loan, after all subsidized loan eligibility has been exhausted. The interest rate is 6.8% since the 2006-07 award year, and variable set each July 1 for loans borrowed before 2006-07. Interest on unsubsidized loans accumulates or may be paid by the borrower during deferment and grace periods, including the period while in school.
An undergraduate dependent student may borrow an additional Federal Direct Unsubsidized loan to the maximum amount of $2,000. An undergraduate independent student may borrow an additional maximum amount of $6,000 for the first or second year and $7,000 for other undergraduate years, and $20,500 for Masters and PhD years. Students are also limited in loan eligibility by the cost of attendance itemized on the financial aid award letter.
There are aggregate loan limits as well:
Federal Perkins Loans
$11,500 for students who have not yet completed two years;
$27,500 for undergraduates;
$60,000 for graduates
Federal Direct Subsidized and Unsubsidized Loans
$31,000 for dependent undergraduates (no more than $23,000 subsidized);
$57,500 for independent undergraduates (no more than $23,000 subsidized);
$138,500 for graduate students (no more than $65,500 subsidized)
Parents of dependent undergraduates may borrow Federal Direct Parent PLUS loans, and Federal Direct Graduate PLUS loans may be borrowed by Graduate students. PLUS loans require no adverse credit or an endorser. The interest rate is 7.9% and the origination fee is 4.204%. There is no annual or aggregate limit but the loan amount cannot exceed the cost of attendance listed on the award letter, minus all the other aid listed on the award letter.
Undergraduates at Maharishi International University typically borrow the maximum amount of Perkins and Direct Subsidized and Unsubsidized loans available. Four years of maximum available loans for undergraduate study for a dependent student would be about $35,000, or about $350 per month repayment over ten years. An Independent student might borrow up to $53,000 or about $500 per month with a ten year repayment.
Repayment begins after a six to nine month grace period, which starts after you cease attending school on at least a half time basis. There are also other deferments such as the Economic Hardship Deferment.
Loan repayment may be made over a standard ten year repayment period, or may be extended for up to 20 years, or may be repaid based on earnings with the unpaid balance written off after 20-25 years (or the balance forgiven after ten years with the Public Service Loan Forgiveness).
These loans must be repaid. The consequences of defaulting on a federal student loan are as follows:
- Wages may be garnished
- US Department of Education may file a lawsuit for collection
- Federal and state income tax refunds may be witheld
- Negative credit history reporting for seven years
- Entire unpaid balance, plus interest and penalties immediately due
- Ineligible to receive further federal student aid
- Referral to a collection agency
- Could loose a professional license
Borrowers must notify the lenders of any change in address, telephone number, name, or enrollment change. Lenders used most frequently by borrowers while attending Maharishi International University:
Perkins Office, Maharishi International University
Federal Direct Loan Service Center