There are loan options available for students and parents to assist in paying for college. It is important to only borrow what you need!

Direct Loans for Students

New student borrowers are limited in the amount of Federal Direct Subsidized Loans they can receive. Subsidized loans are permanently limited to 150% of the length of a student’s academic program.

To be eligible for student or parent loans, you must first complete the Free Application for Federal Student Aid (FAFSA). After completing the FAFSA and turning in all the necessary documents, you will receive an award letter stating the Direct loan type and amount you are eligible for.

Initial financial aid awards are based on full-time enrollment. If you are not enrolled full time at the end of drop/add, your award will be adjusted. If you are enrolled less than half time, your financial aid will be canceled.

In order to receive the Federal Direct Loan, all students must complete a Master Promissory Note (MPN) and Entrance Counseling online.

Dependent Undergraduate Student (except students whose parents are unable to obtain PLUS Loans)
First Year – $5,500 – No more than $3,500 of this amount may be in subsidized loans.
Second Year – $6,500 – No more than $4,500 of this amount may be in subsidized loans.
Third and Beyond (each year) – $7,500 – No more than $5,500 of this amount may be in subsidized loans.

Independent Undergraduate Student (and dependent students whose parents are unable to obtain PLUS Loans)
First Year – $9,500 – No more than $3,500 of this amount may be in subsidized loans.
Second Year – $10,500 – No more than $4,500 of this amount may be in subsidized loans.
Third and Beyond (each year) – $12,500 – No more than $5,500 of this amount may be in subsidized loans.

Graduate Students
Graduate students are generally allowed to borrow up to $20,500 of Direct Unsubsidized Loans each academic year. The amount a graduate student is allowed to borrow can not exceed Salem’s graduate cost of attendance.

Exit Counseling – Graduating from Salem or Not Enrolled At Least Half-Time
Federal regulations require students complete exit counseling for their Direct loans when they have graduated or are no longer enrolled at least half-time. Exit Counseling can be done online. More information can be found in the Exit Counseling Guide provided by the US Department of Education. If you would like a paper copy of this guide, please contact our office.

Loan Repayment Calculators
The following website offers repayment calculators as well as budget information to help determine what you can afford to borrow in student loans.

Department of Education – Calculators

PLUS Loans

If you receive a Direct PLUS Loan as a graduate or professional student, you don’t have to make any payments while you’re enrolled in school at least half-time, and for an additional six months after you graduate, leave school, or drop below half-time enrollment.

If you are a parent borrower, you’ll generally be expected to start making payments on your Direct PLUS Loan once your loan is fully disbursed (paid out). However, you may request a deferment while your child is enrolled at least half-time and for an additional six months after your child graduates, leaves school, or drops below half-time enrollment. You don’t have to make any payments while your loan is deferred. You’ll have the option of requesting a deferment as part of the loan request process. You can also contact your servicer to request a deferment.

During any period when you’re not required to make payments, interest will accrue on your loan. You may choose to pay the accrued interest or allow the interest to be capitalized (added to your loan principal balance) when you have to start making payments. Your loan servicer will notify you when your first payment is due.

To apply for for a Federal Parent PLUS Direct Loan, you must complete the Master Promissory Note as well as the PLUS application to authorize a credit check. From the website, click “Sign In” under Manage My Direct Loans.

Private-Alternative Loans

Federal loans are generally the best options and should be your first consideration. Laws passed by Congress set federal loan interest rates and fees, and define clear terms and conditions for these types of loans.

However, private loans, also known as alternative loans, provide another borrowing option. Although the FASFA is not required, private loans may have varying interest rates and limited repayment options. You should consider alternative loans as a “last resort” lending option.

An option that you can use to review and compare private lenders is available at www.credible.com/salem.

Salem College does not endorse, recommend, or promote any lender for private loans.

The listing shown on Credible is not a preferred lender list, nor does it represent every lender that provides private educational loans. Salem College will certify private education loan requests for any lender you choose, regardless if they appear on Credible or not.

The lender you choose will provide you with current interest rates, processing fees, and co-signer requirements. The lender determines interest rates for loans based on the student and cosigner’s credit worthiness.

Do Your Research

Alternative student loans differ from lender to lender. It’s important to ask questions when seeking a private student loan, so you can compare loans, and choose the one that best fits your needs.

Here are a few questions you might want to ask a potential lender about any private student loan you are considering:

• Will I need a cosigner?
• What is the interest rate?
• Will I need to make payments while I am in school?
• Are there any fees?
• Is there a minimum or maximum amount I can borrow?
• Does the lender require Satisfactory Academic Progress?
• When does the lender capitalize accrued interest? (that is, add any unpaid interest to the principal loan balance, which increases the amount of money you have to pay back)
• Does the lender combine billing statements for federal and private student loans so I only have one monthly payment?
• Does the lender offer electronic payments?
• Can I use this loan to cover an unpaid balance from a previous school term?
• Does the lender offer interest rate reductions or other incentives to borrowers?

Other Frequently Asked Questions

What are the disadvantages of an alternative loan?

• Higher interest rates and fees than federal loan programs.

• You must have a satisfactory credit history and/or use a co-signer to be eligible for these loans.
• School-certified alternative loans are considered a source of financial aid and must be included in your financial aid award package. This may limit how much you can borrow.
• You cannot consolidate alternative loans with federal loans.

How much loan am I eligible to receive?
Your loan eligibility is based on your Cost of Attendance (COA) minus any other awarded financial aid. Salem College cannot certify your loan amount above your maximum eligibility.

Has my loan been approved?
Please be aware that “pre-approval” is not the same thing as a final approval because once the lender receives the school certification record the loan could still be denied by the lender. Please be sure to complete the application in full to avoid delays in the processing of your application.

Can I use my alternative loan to defer payment of my bill at Salem?
If the Financial Aid Office receives an approved school certification request from your lender, your alternative loan amount may defer (count as a credit) your bill.

What is the loan period as requested by the lender’s loan application? The loan period for:

• The academic year is August 2023– May 2024.
• The fall semester is August 2023 – December 2023.
• The spring semester is February 2024 – May 2024.
• The summer semester is May 2024 – August 2024.

Alternative Loan Tips

• Never borrow money you do not absolutely need. Before you explore private student loans, be sure you exhaust your other funding options, and then you will understand how much money you need to borrow through an alternative loan.
• Be selective in the lender you choose – compare benefits.
• Budget for repayment.
  • Be realistic about what your salary will be when you graduate from college.
  • Add up the total amount you will owe on all your student loans.
  • Estimate what your monthly payments will be.
  • Compare your estimated monthly payment with your estimated monthly income.