Loan Programs
Explore the range of options available for educational borrowing to finance a college education thoughtfully. From federal loans with competitive interest rates and flexible repayment plans to private loans tailored to specific needs, understanding these financing tools is crucial. Below is a list of loan terminology that helps navigate borrowing decisions effectively and achieve academic goals while maintaining financial stability.
| Disbursement/Disbursed Payment of federal student aid funds to the borrower by the school. | Lender The organization that made the loan initially; the lender could be the borrower’s school; a bank, a credit union, or other lending institutions; or the U.S. Department of Education. |
| Entrance Counseling A mandatory information session that takes place before you receive your first federal student loan that explains your responsibilities and rights as a student borrower. | Origination Fee A fee charged by a lender on entering into a loan agreement to cover the cost of processing the loan. Origination fees are assessed upfront and reduce the amount paid-out for your loan. |
| Exit Counseling A mandatory information session that takes place right before you graduate or drop below half-time enrollment that explains your loan repayment responsibilities and when repayment begins. | Promissory Note/Master Promissory Note/MPN A binding legal document that you must sign when you get a loan. The MPN lists the terms and conditions under which you agree to repay the loan and explains your rights and responsibilities as a borrower. |
| Grace Period For certain types of loans, a period of time after you graduate, leave school, or drop below half-time enrollment when you are not required to make payments. | Subsidized A loan based on financial need for which the federal government pays the interest that accrues while the borrower is in-school, grace, or deferment status, and during certain periods of repayment under certain income-driven repayment plans. |
| Interest A loan expense charged for the use of borrowed money. Interest is paid by a borrower to a lender. The expense is calculated as a percentage of the unpaid principal amount of the loan. | Unsubsidized A loan for which the borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan. |
| Interest Rate The percentage at which interest is calculated on your loan(s). Lower interest rates are always better. |
Federal Student Loans
Learn the distinctions between the Subsidized and Unsubsidized loans to understand their financial implications and eligibility criteria. Whether you're a prospective student or planning your educational financing, clarity on these options will guide your decision-making process effectively.
Similarities
- Interest Rate: Both Subsidized and Unsubsidized Loans have a fixed interest rate of 6.53%.
- Origination Fee: Both loans have a 1.057% origination fee.
- Payment & Processing: Both loan types are funded by the Department of Education and processed by Pitzer College.
- Repayment: Repayment for both loans begins 6 months after graduation.
Differences
- Financial Need: Subsidized loans are awarded based on financial need, while unsubsidized loans are available to eligible students regardless of need.
- Interest Accrual: Subsidized loans do not accrue interest while the student is enrolled at least half-time, whereas Unsubsidized loans start accruing interest immediately.
Federal Parent PLUS Loan
Financing a Pitzer education can involve deferring some costs through loan programs. Here’s a guide to help navigate the borrowing options:
- Eligibility: Biological or adoptive parent (or in some cases, the stepparent) of a dependent undergraduate student enrolled at least half-time at an eligible school. Grandparents and other relatives are not eligible. Multiple parents can complete and pass separate credit checks, if necessary.
- Credit Check: Must be able to pass credit check and not have an adverse credit history
- Borrowing Limit: Up to the full cost of attendance minus any financial aid awarded to student.
- Interest Rate: Fixed at 9.08% for the 2024-25 academic year.
- Origination Fee: 4.228% for loans paid before October 1, 2024.
- Interest Accrual: Begins immediately upon disbursement.
- Repayment: Starts after the second loan disbursement, usually 60 days after the spring disbursement, but can be deferred until the student graduates or is no longer enrolled at least half-time.
Alternative Loans
Alternative loans, also known as private loans, provide additional financial support beyond federal aid to bridge the gap between the cost of attendance and the student's financial aid package. However, they should only be considered after exploring all other forms of financial aid.
Eligibility Requirements
To qualify for federal and private loans, students must be U.S. Citizens or Eligible Non-Citizens and enrolled at least half-time. Students with limited credit history or low credit scores may need a co-borrower. International students can apply for alternative loans with a creditworthy co-borrower who is a U.S. Citizen or Eligible Non-Citizen.
Federal Direct Loans vs. Private Loans
Federal loan programs generally provide more favorable repayment terms than private loans, including options such as Federal Direct Consolidation Loans, Federal Income-Based Repayment Plans, and Economic Hardship deferments, which are not available for private loans.
Federal Direct Student Loans offer a fixed interest rate of 6.53% for both subsidized and unsubsidized loans, along with an origination fee of up to 1.057%. These loans are accessible to all eligible students enrolled at least half-time, who should exhaust their federal loan options before turning to private loans.
Loan Terms and Conditions
Interest rates, origination fees, and repayment terms for private loans vary widely and are determined by the lender. Most private lenders require a co-borrower, and interest rates are based on the creditworthiness of the borrower and/or co-borrower. Interest rates can fluctuate monthly or quarterly, and there may not be a maximum cap on interest rates.