Loans and Lenders
Items to Consider Before Applying for a Loan
Loans are an integral part of financing a college education. Students and parents should borrow wisely, which means making sure you research and understand all of your possible options.
- If you are not sure of your possible eligibility for need-based financial aid and college-funded student employment from Vassar College, follow the instructions found at Apply for Aid to apply for financial aid.
- Eligibility for federal grants and other federal programs is determined by completing the Free Application for Federal Student Aid (FAFSA).
- Applying for private scholarships and grants is a bit like playing your state lottery, but it may be worth the effort. Be sure to stay away from any scholarship/grant searches that require a fee. Look for free searches like fastweb.
- Visit your state’s education department website to find out what grant or state-backed loans might be available to you. The latter is very important because some states do offer education loans for their residents that are less costly than alternative education loans from private lenders.
- Federal student and parent loans are less costly than alternative private education loans, and most of these loans require a co-signer if you want to reduce the cost of the loan. The Federal Parent Loan (PLUS) has a provision for loan forgiveness in the event that either the parent or student dies or suffers 100% disability. This is not offered by private student loans where a co-signer is required for the student.
Types of Loans
William D. Ford Federal Direct Student Loan Program
The Federal Direct Stafford Loan is available to all students, either as a subsidized loan, (no interest is charged while in school at least half-time) or an unsubsidized loan (interest is charged during all periods). There are no payments required while in school for either loan. Eligibility for a subsidized loan is determined by assessing the family financial need, using data provided on the Free Application for Federal Student Aid (FAFSA), the cost of education, and the amount of other financial aid the student receives. The maximum subsidized loan amount that can be borrowed in any given year is $3,500 for first-year students, $4,500 for sophomores, and $5,500 for juniors and seniors. If the student is not eligible for a subsidized loan, they can borrow the same class year limits in an unsubsidized loan. In addition to the class year limits, all students may borrow an additional $2,000 unsubsidized loan each year. The loan carries a fixed interest rate of 4.45%. For all loans disbursed after July 1, 2014, there is a 1.073% origination fee which is deducted before disbursement. Repayment begins six months after the student graduates, or drops below halftime enrollment, with up to 10 years to repay. Deferments are available for students while attending graduate school, and for many other situations. Students who work in the non-profit sector after graduation may be eligible for loan forgiveness under some circumstances. More information is available at the Direct Loan website for students.
For the completion of the required Master Promissory Note (MPN) and Entrance Counseling please refer to How to Apply For Loans.
Federal Perkins Loan
The Federal Perkins Loan is a federal program which provides loans to students with demonstrated financial need and is administered by Vassar College. Vassar has very limited Perkins Loan funds and will award this loan to previous borrowers only. It is a low-cost, fixed-rate loan that can be repaid over a period of 10 years after the student either graduates or leaves the college. This is a subsidized loan with a fixed interest rate of 5%.
William D. Ford Federal Direct Parent Loan for Undergraduate Students (PLUS)
The Federal Direct Parent Loan for Undergraduate Students (PLUS) is a federal loan available to parents. Parents may borrow up to the total cost of education less any financial aid the student receives. The interest rate is fixed at 7%. There is a 4.264% origination fee. Repayment begins shortly after the loan is fully disbursed. If the parent is denied a loan based on credit, they can appeal with an endorser, or the student may take an additional $4,000 - $5,000 in an unsubsidized Stafford loan (depending on year in school). More information is available at the Direct Loan website.
For application instructions please refer to How to Apply For Loans.
Alternative/Private Education Loan
Alternative loans allow students to finance the portion of the cost of education that exceed the Direct Student Loan limits. Some Vassar families have found alternative loan products to be helpful as a loan of last resort. Before taking an alternative loan, it is advisable to discuss your options with the Office of Financial Aid to be sure you have exhausted all federal loan options. Be aware that interest rate caps on alternative loans are comparable with credit card usury caps of at least 18% (up to the state maximum) compared to the fixed rate on PLUS loans. The maximum amount that can be borrowed in any academic year is the cost of education less financial aid. Vassar College has a policy of refraining from an exclusive partnership with a single lender; we do not endorse or recommend any lender in particular. The lenders listed on the ELMSelect website have been used by other Vassar students in the past year. These are non-government loans with either the student or parent as the primary borrower and generally require a co-signer. The basis for the interest rates of these products differs among lenders. A comparison of these interest rates (prime rate versus 3 month Libor) can be found at Financial Forecast Center. For additional information, you should also visit the individual lenders websites.