Loan Programs
Several loan programs are available. A student is not required to accept a loan in order to receive other types of aid. Students should consider replacing part of the value of a loan with a job. Contact Student Employment to determine whether employment is available.
Students accepting student loans are committing themselves to a serious legal and moral obligation: loans must be repaid. Repayment may take ten years or longer after leaving Central Michigan University. Students are urged to consider their ability to repay a loan, their future credit rating, and their potential indebtedness before accepting a loan. The staff of the OSFA are available to discuss the implications of loans on the student’s future financial situation.
Federal Stafford Direct Loan Program
Subsidized Loans. Subsidized loans are made to a student by the federal government and applied directly to the student’s account. These loans are based on need, and eligibility is determined by the OSFA. All applicants must file a FAFSA. Loan applications are not required. CMU will initiate processing unless the student declines the suggested Federal Direct Loan on the award statement.
Undergraduate students making satisfactory academic progress who carry at least six (6) semester hours may borrow up to $3500 for the first year of undergraduate study, $4,500 for the sophomore year, and $5,500 for the junior and senior years of undergraduate study, depending on financial need. The subsidized loan aggregate maximum for undergraduate study is $23,000. Application is usually made for one semester or an academic year (9 months), with summer school requiring a separate CMU Summer Application.
For enrollment periods beginning on or after July 1, 2017, the annual fixed interest rate for a subsidized loan is 4.45%. There is a 1.066 percent origination fee deducted from the loan amount.
Six months after ceasing to be enrolled at least half-time, the borrower must begin repayment. Several repayment options are available; contact the federal servicer. Payment of principal may be deferred under certain conditions. Refer to your promissory notes for details.
Unsubsidized Student Loans. Provisions are the same as the Federal Direct Subsidized Loans, except that the loan is not based on need. The program is open to students who do not qualify for the Federal Direct Subsidized Loan or who do not qualify for the full amount. The student is responsible for the interest that accrues while he/she is in school. Dependent students who demonstrate financial need for a subsidized loan based on grade level may borrow up to $2,000 in an unsubsidized loan, not to exceed the cost of attendance. Independent students may borrow the Federal Direct Subsidized Loan limits as well as an additional Federal Direct Unsubsidized Loan up to $6,000 per year for freshmen and sophomores and up to $7,000 per year for other independent undergraduates, not to exceed the cost of attendance. The interest rate that borrowers pay while in school is fixed at 4.45%. There is an origination fee of 1.066 percent.
The aggregate maximum for undergraduate study is $31,000, which may be a combination of subsidized and unsubsidized loans. The aggregate maximum for an independent undergraduate student is $57,500.
Direct PLUS (Parent) Loans
The Federal Direct PLUS Loan program makes loans at an annual fixed interest rate of 7.00% to pay for the costs of study at postsecondary schools. Under the program parents are eligible to borrow on behalf of dependent undergraduate students. Loan funds may be used only to pay for students’ educational costs. The maximum eligibility for a Federal PLUS equals the cost of attendance minus estimated financial aid for the loan period. All applicants must file a FAFSA for the student for whom they wish to borrow. Processing will be initiated when the parent borrower provides requested information for the promissory note. Upon receipt of the signed promissory note, funds will be deposited to the student’s account. The federal servicer is required to check the credit worthiness of all Federal Direct PLUS Loans applicants.
Parents may choose to defer payments on a PLUS loan until six months after the date the student ceases to be enrolled at least half time and pay accruing interest monthly or quarterly, or allow interest to be capitalized quarterly. Interest begins to accumulate at the time the first disbursement is made. Parents may choose to repay both principal and interest while the student is in school or take advantage of deferring payments.
Loan Counseling
Entrance Interviews. Students who have applied for a Federal Direct Student Loan as a first-time borrower are required by federal regulations to complete an entrance interview before their loan funds may be applied to their accounts. Important information on loans, debt management, repayment options and consequences of default will be presented. Information regarding this mandatory session is enclosed with the student’s award package.
Exit Interviews. Students who receive a Federal Direct Loan are required by federal regulations to complete a loan interview before graduating or withdrawing from the university. Important information regarding deferment and payment schedules will be discussed. Students are contacted electronically to complete on-line exit counseling. Exit counseling materials will be mailed to students who fail to complete on-line exit counseling within 30 days of notification. During exit counseling CMU is required to obtain the following information from the borrower:
- expected permanent address
- name and address of the borrower’s expected employer
- address of the borrower’s next of kin
- any corrections to CMU’s records concerning name, address, social security number, references, and driver’s license number.
For Federal Direct loans, CMU is required to provide the above information to the federal servicer within 60 days of the exit counseling completion.