Student Loans are a good way to finance your education; however, just like car loans, mortgages and even credit cards, student loans are loans and must be repaid by the student or the parent, depending upon who takes the loan out.
Student loans have limits. Be sure to read the information below to understand the maximum amounts that are available both per academic year and the lifetime limits (otherwise known as loan aggregates).
It's important that you Know Your Debt.
Key things to remember about using student loans:
- Borrow only what is necessary to finance your education.
- Look for alternatives to borrowing, such as scholarships, grants, and work study.
- Use the budgeting tools we have available.
- Contact your financial aid counselor to discuss smart borrowing and establishing a plan to finance your academic program.
- Contact Career Services to look for employment opportunities.
- Students have the right to cancel or reduce their student loan prior to disbursement. Contact your financial aid counselor for more information.
Fact: There are Limits to What You May Borrow!
The maximum amount you can borrow each year in Direct Subsidized and Unsubsidized Loans depends on your grade level and on whether you are a dependent student or an independent student. The following table shows the maximum amount of money you may borrow each academic year in Direct Subsidized and Unsubsidized Loans:
|Annual Limits||Dependent Student (1)||Independent Student(2)|
|$5,500 ($3,500) (3)||$9,500 ($3,500) (3)|
|$6,500 ($4,500)||$10,500 ($4,500)|
3RD- AND 4TH-YEAR UNDERGRADUATE
|$7,500 ($5,500)||$12,500 ($5,500)|
|NA (All graduate and professional students are considered independent.)||$20,500|
(1) Except those whose parents are unable to borrow a PLUS loan.
(2) These limits also apply to dependent students whose parents are unable to borrow a PLUS loan.
(3) The numbers in parentheses represent the maximum amount that may be subsidized.
The actual loan amount you are eligible to receive for an academic year is determined by your school and may be less than the maximum annual amounts shown in the chart above.
Maximum Life-time Limits (Aggregates)
BELOW ARE THE AGGREGATE (TOTAL) LIMITS FOR DIRECT SUBSIDIZED AND UNSUBSIDIZED LOANS:
- $31,000 for dependent undergraduate students excluding those whose parents are unable to borrow a PLUS Loan (no more than $23,000 may be subsidized)
- $57,500 for independent undergraduate students and dependent undergraduates whose parents are unable to borrow a PLUS loan (no more than $23,000 may be subsidized)
- $138,500 for graduate or professional students (no more than $65,500 may be subsidized; includes loans for undergraduate study)
These aggregate limits include both Direct Subsidized and Unsubsidized Loans and any subsidized and unsubsidized Federal Stafford Loans received through the Federal Family Education Loan (FFEL) Program.
NSLDS, as mentioned above, is a government web site where students can track and monitor all of their government student loans.
With a Direct PLUS Loan, a graduate/professional student or the parent of a dependent student can borrow up to the cost of the student's attendance minus other financial aid the student receives.
Smart borrowing means limiting your borrowing so that you do not reach your aggregates prior to graduating with your intended degree. It also means graduating with minimal debt. Talk with your advisor or financial aid counselor to establish a plan for minimizing the debt you take on while attending Davenport.
- Do your homework. Many private banks and lenders as well as the federal government are in the student loan business.
- Visit Federal Student Aid to learn more about Federal Government Direct Loans.
- Try not to take out a larger loan then necessary to fund your college experience. Be sure to apply for things such as work-study positions, grants, and scholarships to help pay for your college expenses. This will help lower the amount of money you may need to borrow.
- Keep track of what kind of loan(s) you have, whom you’ve borrowed the money from and how much you borrow. Loans have different minimum monthly payments, interest rates and repayment plans. Don’t just sign the promissory note and forget about it. Keep it in a safe place so that you can refer back to it.
- Shop and compare. Loans come in several varieties: subsidized, unsubsidized, and alternative. You should maximize your federal loan options prior to considering bank-based loans. Bank-based loans have different interest rates and payback options. Make sure you look at all the loan options and choose the one that is most appropriate for your financial needs.
- Remember loans have to be paid back. They are not free whether your loan is subsidized or unsubsidized; you will owe interest on the money that you borrow. If your loan is larger than the amount needed to pay for your tuition, you may receive a check for the excess amount. If you decide to spend this check, keep in mind that you must pay it back along with interest fees.
- Keep in mind loans must be repaid even if you do not finish school. When the time comes to pay back your student loans, make sure you set up a repayment plan that makes sense for your financial situation.
- You must start repaying your student loan six months (your grace period) after your official graduation date or the date that you decide to leave school. If for some reason you have trouble paying back your student loans, you can seek a hardship deferment of the loan until you’re able to pay back the money you owe. Contact your servicer to get deferment and loan consolidation options.
- Understand what loan consolidation is and realize that it is not always beneficial for everyone.
Q&A about Student Loans
WHO OWNS MY LOAN?
If you are not sure who owns your loan, you can check on the National Student Loan Data System (NSLDS) at studentaid.gov. You will have to use your federal FSA ID (the one you received to sign your FAFSA) and your social security number. You will then be able to find out who the holder of your loan is, who the servicer is and how much you owe etc. You can also call your school and ask them for assistance.
WHERE DO I SEND MY PAYMENT?
Student loan payments are to be sent to your loan servicer. Sometimes student loans are sold which may change where you have to send your payment. If you are unsure of where to send your payment, review the written materials from your lender, visit their website or call them.
CAN I CHANGE MY PAYMENT AMOUNT/PAYMENT PLAN?
Usually borrowers can change their repayment plan at least once a year and sometimes monthly. There are certain minimum monthly requirements that must be met, depending on the payment plan. Contact your lender or servicer for more information.
MY LOAN WAS SOLD-WHAT DOES THIS MEAN?
Just like a car, bank or mortgage loan, student loans can be sold to another bank, lender, to the U.S. Department of Education or to a secondary market. Regardless of who holds your student loan, you are still legally obligated to repay the full amount of the loan and the interest fees.
I MISSED MY PAYMENT, WHAT DO I DO NOW?
Contact your lender immediately to discuss your options. Consider changing your repayment plan if your current plan is not working for you. Keep track of all communications.
I CAN’T MAKE MY PAYMENT, WHAT SHOULD I DO?
Don’t ignore the debt…it won’t go away. There are many options to help, including changing your payment due date, repayment plan, or requesting a deferment or forbearance. Contact your lender or school for assistance.
DON’T SEE YOUR QUESTION HERE?
Submit a question to FinancialAid@davenport.edu and we will do our best to provide an answer within two business days. Please indicate “LOAN QUESTION” in the subject line of the email.
Thinking About Borrowing?
Loans are often needed to help pay for college. Get educated, both here on our website and by visiting with your Financial Aid counselor.
How Loans are Determined
- DU recommends most students start with their base (lowest) level loan eligibility amount ("subsidized ability").
- This approach helps you manage your debt and complete your program before you reach lifetime loan limits.
- You may be eligible for additional unsubsidized money, such as PLUS loans and/or Grad PLUS loans.
- Browse our financial aid pages to learn more, then come to the Financial Aid office and let's talk!
Fact: Loans MUST be Repaid
It might seem strange to read the sentence above; however, it's the main reason you want to be smart about borrowing. It is not "free money," but if you are just getting started with budgets and learning financial obligation, it can seem that way at first. Don't make that mistake. Remind yourself that every cent you borrow is more than a cent you will have to pay back.
Face the Facts. You'll be Glad You Did.
- Even if you drop out of school, loans must be repaid.
- Even if you do not get a job right away in your chosen field, loans must be repaid.
- Even if you do not finish your degree, loans must be repaid.
You need to be careful about borrowing because defaulting on student loans will damage your credit and cause other difficulties as you are trying to establish your career.
Student loans can be a very useful resource to pay for college. It's just that at Davenport, we want to help you understand all aspects of the student loans and show you additional options.
Davenport University is required to report loan information, for parent and student borrowers, to the National Student Loan Data System (NSLDS). NSLDS is a national database viewed by schools and lenders.
Let Us Help
- Know what you are borrowing.
- Use the government website NSLDS to help you monitor your total borrowing.
- Meet with your financial aid counselor to develop a plan.
- Use Career Services to find part-time jobs, including work study.
- Research scholarships.
- Develop a careful budget.
Need Help with a Budget?
Check out the money managing resources below to help set – and stick with – a budget. If you utilize the ideas listed below, you will be able to limit your borrowing as well.
CashCourse Basics about budgets, spending habits, credit score and tons more! Check it out!
Mapping Your Future Advice on how to budget your money and stretch your dollars.
You can also find resources through the State of Michigan at michigan.gov. Their resources provide a lot of helpful information and tips to help you budget and repay your student loans.
FAFSA4caster will help you get an early start on the financial aid process by providing you with an early estimate of your eligibility for federal student aid. In addition, FAFSA4caster will increase your knowledge of the financial aid process and provide information about other sources of aid.