Graduate – Learn About Loans

Let’s begin

• Payment Plan
• Borrowing Against Retirement Savings
• Credit Cards

Federal Stafford Loans

Federal Stafford Loans remain the best financing option available to students.  They also offer many federal benefits and payment options which also make them very flexible.

Loan Terms

Interest Rates – The interest rate on a Stafford Loan for new loans disbursed after July 1, 2006 is a fixed rate of 6.8%.  The same rate applies to the in-school, grace repayment periods.

Fees – In addition to interest, some lenders charge an up front fee that could total up to 2.5% of the amount of your loan.  These fees could also include a 1% default fee that is required by the school’s guarantee agency, American Student Assistance.  Please refer to our list of preferred lenders for more information on specific lenders.

Borrowing limits for Graduate Students

The overall annual limit for any subsidized loans is $8,500 plus an additional $12,000 in unsubsidized loans for the academic year.

However, you can never borrow more than the school’s cost of attendance minus any other financial aid you receive, so you may be eligible for less than the maximum. 

Subsidized or unsubsidized?

The primary difference between a subsidized and unsubsidized loan is that interest is charged on an unsubsidized loan while the student is in school, and during grace or deferment periods.  Students do have the option of making regular payments while in-school, paying only the interest, or deferring payment entirely.

Students seeking more information on how their subsidized loan eligibility was determined should contact their financial aid advisor.

How to apply?

Applying is easy!  Once you receive your award package you will need to visit your Banner Web account.  You will be asked to accept your aid, which includes your student loans.  Once this requirement is complete, you may be prompted to take an entrance interview.  This requirement is for first-time borrowers only and is really just a web tutorial and quiz designed to ensure that all new Stafford borrowers understand their rights and responsibilities.  You will then be asked to choose a lender from the list provided.  Once this is completed the student will need to sign a Master Promissory Note (MPN) which can be completed either with a wet signature or electronically.

The Financial Advisement Office at SUNY Cortland closely monitors the performance of our student loan lenders to ensure the highest quality of service for our students.  Our “preferred” lenders have demonstrated a commitment to providing the very best in customer service, technology and loan processing.  Many of these lenders offer zero fees, interest rate reductions or other added benefits to Cortland students.  Find out more about our Stafford Loan Lenders and the benefits they offer. 

Graduate PLUS Loans

Starting on July 1, 2006 graduate and professional students can borrow money through the PLUS loan program to pay for their own education.  Most graduate students will not have the option to borrow a Graduate PLUS loan at SUNY Cortland as our cost of attendance is relatively low.  We have provided the information as a service to our students as they pose an interesting alternative to private educational loans.  We strongly suggest having a conversation with your financial aid advisor in for further information.

The Graduate PLUS loan will not reduce eligibility for the Stafford loan, but the PLUS loan limit takes the amount borrowed under the Stafford Loan into account.  The PLUS loan is limited to cost of attendance minus aid received.

FAFSA – Graduate students who borrow the Grad PLUS loan must submit the Free Application for Federal Student Aid (FAFSA) and max out the Stafford Loan first.

Eligibility – Eligibility for private educational loans typically depends on your debt-to-income ratio and FICO score.  Eligibility for the PLUS Loan does not depend on these factors.  You can get a PLUS loan even if you have a bad credit score, so long as you don’t have adverse credit history.

Interest Rates – Most private educational loans are variable rate loans with an interest rate that depends on the borrowers (and/or co-borrower) credit score.  The PLUS loan has a fixed interest rate of 8.5% that does not depend on your credit score.  Generally, the PLUS loan will be less expensive than most private student loans.

Loan Fees – The loan fees on a PLUS loan total 4%, while the loan fees on private educational loans depend on your credit score and can be as high a 11%.

Consolidation – Graduate PLUS loans can be consolidated with other federal educational loans, such as the Stafford and Perkins loans.  Private loans cannot.  Also, the  Graduate PLUS loan balance will count toward the economic hardship deferment while private educational loans do not.

Now let’s talk about some additional financing options!

The Cortland Monthly Payment Plan:

The Cortland monthly payment plan allows you to spread out your semester bill across five monthly payments.  You can use this short-term payment option to pay an affordable amount each month.  Your financial aid advisor can help you calculate a plan that is right for you.  Learn more about the SUNY Cortland Monthly Payment Plan.

Alternative Loans:

The federal loan programs will probably provide you with all the borrowing power you need to finance a Cortland education.  However, if you’re looking for additional funds, several lenders make education loans to students at rates that are usually just slightly higher than the federal loans.  Alternative loans are private, consumer loans and don’t offer the same safeguards or deferment options as the federal programs, but some students prefer the convenience and flexibility offered by these loans.  Typically, alternative loan payments can be deferred while the student is in school, but each lender has its own policies.  Interest rates are almost always variable not fixed like the federal loan rates.  For this reason, we encourage student to speak with their Advisor in our office prior to applying for these loans.

While these loans are the “right” choice for many students, we want to make sure that you have all the information you need to make a good decision.  SUNY Cortland provides a list of preferred Alternative Loan providers that have a proven track-record of superior service.  Many of these lenders provide special rate reductions and other services to SUNY Cortland students.  Also, many of these lenders can provide combined billing if you also choose them for your Stafford Loans.  Learn more about Alternative Loans.

Home Equity Loans:

Home Equity Loans or lines of credit are popular borrowing options that provide great flexibility and possible tax-deductibility for the interest.  Unlike educational loans, these funds are not restricted to use solely for college costs.  You may prefer to keep all of your educational and non-educational borrowing together in a single loan (and single payment) tied to their home equity.  The interest rates on home equity loans are generally comparable to “Alternative” educational loans (see above).  This also might be a good time to consider refinancing a primary mortgage.  Your local bank can provide you with more information.

Borrowing Against Retirement Savings:

Many retirement plans allow investors to borrow against their retirement savings.  Using such a loan to finance your education can be a complicated decision.  Also, you may have other savings that could be used to finance college.  If these funds were saved specifically for education, then you may want to have a discussion with your Advisor about how to make the money last for four (or more) years.  However, if the funds were saved for retirement, using them (or borrowing against them) could significantly reduce your income in retirement.  Further, if the annual return on your investments is greater than the cost of a student loan, it is probably wise to leave your investments where they are and borrow instead.  Remember that there can be tax penalties for early withdrawal of retirement funds, while interest on federal student loans can often be tax deductible.  It may be wise to consult your financial planner or tax advisor prior to making the decision to use your retirement savings to pay for your education.

Credit Cards

Many students make Cortland Monthly Payment Plan payments with a credit card because of the convenience (web payments) and incentive programs (airline miles, etc).  they are also useful at the college bookstore or for other educational costs.  However, credit cards should not be used to finance college expenses over the long term.  If you are carrying educational costs on your credit card from month-to-month, there are almost certainly better options.  We suggest speaking with your financial aid advisor about using credit cards before your credit card debt becomes a costly problem.

We can help!  Every student at Cortland has an assigned financial aid advisor to help them navigate the complex world of college financing.  We can’t make the financing decision for you, but we can provide information to help you make a wise decision.  We can also help students with education and information on a number of financial issues unrelated to paying for college.  That’s way we say:

                   “We’re more than just financial aid!”

Borrowing limits for dependent (traditional) students:

Most undergraduates are considered dependent students and can take out Stafford

loans up to the following maximum limits:

• Freshmen: $2,625
• Sophomores: $3,500
• Juniors and seniors: $5,500

However, you can never borrow more than your school's cost of attendance minus any other financial aid you receive, so you may be eligible for less than the maximum. In a student’s undergraduate years, a dependent student can borrow no more than a total of $23,000, which includes a fifth year or more, if necessary.

Borrowing limits for independent (non-traditional) students:

Independent students are generally over 24 years of age, military veterans, or are supporting their own families. Also, dependent students whose parents have applied for a PLUS loan and been denied by the lender are eligible for the larger “independent” loan amounts.

The maximum amounts an independent student can borrow in Stafford loans each year (including subsidized and unsubsidized loans, which are explained below) are:

• Freshmen: $6,625
• Sophomores: $7,500
• Juniors and seniors: $10,500

An independent student can borrow up to $46,000 during all his or her undergraduate years. Graduate students can borrow up to $18,500 a year, up to a maximum of $138,500, including their undergraduate Stafford loans.

Subsidized or unsubsidized?

Federal Stafford student loans may be subsidized, meaning that the federal government pays the interest while the student is in school, during the six month grace period (after leaving school), and during any period during which the student can defer payments (such as during graduate school). The package you receive will tell you whether you qualify for a subsidized loan.

If you have financial need that's less than the annual loan limit, you might be offered an unsubsidized loan, or a combination of both a subsidized loan and an unsubsidized loan. A college freshman with just $2,000 of need, for instance, might be offered a $2,000 subsidized Stafford loan as well as a $625 unsubsidized Stafford to help cover the family's expected contribution to college costs. The overall Stafford-loan borrowing limit for college freshmen who are dependent students is $2,625.

The primary difference between a subsidized and unsubsidized loan is that interest is charged on the loan while the student is in school, and during grace or deferment periods. Students have the option of making regular payments while in-school, paying only the interest, or deferring payment entirely.

Almost all of Cortland ’s students, regardless of family income, are eligible for either the subsidized and/or unsubsidized Stafford Loan. Either way, Stafford Loans are a very affordable way to help students fund their education, while building a positive credit history.

How to apply:

Applying is easy! Once you receive your award package you will need to visit your Banner Web account. You will be asked to accept your aid, which includes your student loans. Once this requirement is complete, you will then be prompted to take an “entrance interview”. The entrance interview is really just a web tutorial and quiz designed to ensure that all new Stafford borrowers understand their rights and responsibilities. You will then be asked to choose a lender from the list provided. Once this is completed a Master Promissory Note (MPN) will be sent to you.

The Financial Advisement Office at SUNY Cortland closely monitors the performance of our student loan lenders to ensure the highest quality of service for our students. Our “preferred” lenders have demonstrated a commitment to providing the very best in customer service, technology and loan processing. Many of these lenders offer fee or interest rate reductions or other added benefits to Cortland students. Find out more about our Stafford Loan Lenders to and the benefits they offer.

Federal Perkins Loans

Students with high financial need may qualify with an attractive interest rate of 5%. Your financial aid award letter will tell you if you’re eligible. The college receives funds for this program from the federal government and from Cortland alumni who are in repayment on their loans. Freshman student’s who qualify, are eligible for up to $2500.

Repayment Terms

No payments are due on a Perkins loan until nine months after you graduate or drop below half-time. Typically, the repayment term is ten years or less. Unlike the Federal Stafford Loan, Perkins loans can be discharged (canceled) in full or in part when you are employed at certain kinds of work!

Some of these include:

• Full-time teacher, when your school serves a low-income area, you teach special-education students, or you teach math, science or other subjects with a shortage of teachers
• Full-time nurse or medical technician
• Full-time law enforcement or corrections officers
• Full-time Peace Corps volunteer.

Additional Financing Options

The Cortland Monthly Payment Plan

The Cortland monthly payment plan allows you to spread out your semester bill across five monthly payments. Many families use this short-term payment option to pay an affordable amount each month while financing the remainder with a long term option like the PLUS loan. Your advisor in the Financial Advisement Office can help you calculate a plan that is right for you and your family. Learn more about the SUNY Cortland Monthly Payment Plan.

Alternative Loans

The federal loan programs will probably provide you with all the borrowing power you need to finance a Cortland education. However, if you’re looking for additional funds, several lenders make education loans to students (with a credit-worthy cosigner) at rates that are usually just slightly higher than the federal loans.Alternative loans are private, consumer loans and don’t offer the same safeguards or deferment options as the federal programs, but many families prefer the convenience and flexibility offered by these loans. Typically, alternative loan payments can be deferred while the student is in school, but each lender has its own policies. Interest rates are almost always variable, but generally are not capped like the federal loan rates. For this reason, we encourage families to speak with their Advisor in our office prior to applying for these loans.

While these loans are the “right” choice for many families, we want to make sure that you have all the information you need to make a good decision. SUNY Cortland provides a list of preferred Alternative Loan providers that have a proven track-record of superior service. Many of these lenders provide special rate reductions and other services to SUNY Cortland students. Also, many of these lenders can provide combined billing if you also choose them for your Stafford Loans. Learn more about Alternative Loans.

Home Equity Loans

Home Equity loans or lines of credit are popular borrowing options that provide great flexibility and possible tax-deductibility for the interest. Unlike education loans, these funds are not restricted to use solely for college costs. Many parents prefer to keep all of their educational and non-educational borrowing together in a single loan (and single payment) tied to their home equity.The interest rates on home equity loans are generally comparable to “Alternative” education loans (see above). This also might be a good time to consider refinancing a primary mortgage. Your local bank can provide you with more information.

Borrowing Against Retirement Savings

Many retirement plans allow investors to borrow against their retirement savings. Using such a loan to finance your son or daughter’s education can be a complicated decision. Also, many families have other investments or savings that could be used to finance college. If these funds were saved or invested specifically for education (such as a 529 plan or Coverdell IRA), then you may want to have a discussion with your Advisor about how to make the money last for four (or more) years. However, if the funds were saved for retirement, using them (or borrowing against them) could significantly reduce your income in retirement. Further, if the annual return on your investments is greater than the cost of a PLUS loan (see above), it probably is wise to leave your investments where they are and borrow instead. Remember that there can be tax penalties for early withdrawal of retirement funds, while interest on the PLUS loan can often be tax deductible. It may be wise to consult with your financial planner or tax advisor prior to making the decision to use your retirement savings to pay for your son or daughter’s college education.

Credit Cards

Many students/parents make Cortland Monthly Payment Plan payments with a credit card because of the convenience (web payments) and incentive programs (airline miles, etc.). They are also useful at the college bookstore or for other educational costs. However, credit cards should not be used to finance college expenses over the long term. If you are carrying educational costs on your credit card from month-to-month, there are almost certainly better options. We suggest speaking with your advisor in the Financial Advisement Office about using credit cards before your credit card debt becomes a costly problem.

We can help! Every student at Cortland has an assigned advisor in the Financial Advisement Office to help families navigate the complex world of college financing. We can’t make the financing decisions for you, but we can provide information to help you make wise decisions. We can also help students with education and information on a number of financial issues unrelated to paying for college. That’s why we say: