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2008-2009 LOANS & LENDERS GUIDE

Loans allow you to borrow money for school. Student loans, unlike grants and work-study, are borrowed money that must be repaid after a student leaves school, graduates or drops below half-time status, with interest, just like car loans and mortgages. Loans are legal obligations, so before you take out a student loan, think about the amount you’ll have to repay over the years. Federal loan programs include Stafford, Perkins, and PLUS loans. As needed, you may pursue private loans as well. (The Perkins loan is awarded to students who demonstrate financial need and meet the JWU priority filing deadline for consideration.  JWU serves as the lender, and the loan is made with government funds.  Repayment is made to JWU.) 

Students often lack the information they need to properly manage their finances before, during and after college. There is a comprehensive website (www.webfinaid.com) on financial literacy to help students learn about FICO scores, credits cards, interest rates and money management. Tools and calculators are also available to help students compile a budget, estimate their family’s Expected Family Contribution, and calculate student loan payments.

A NOTE ON LENDERS

One of the most important decisions that you face as a borrower is the selection of your lender. Keep in mind that the relationship you initiate with your first loan application could last for ten or more years. There are many differences between lenders, so borrowers are encouraged to research their options and compare lenders before making a final selection.

You are not required to borrow through one of our listed lenders.  There are no penalties for selecting another lender; we encourage you to find the best rates and services for you and your family.

The university mentions the lenders below as options because they offer a combination of highly competitive terms and quality customer service. Loan products are suggested by the university to students and their families based upon research conducted by Student Financial Services, referencing sources including the internet, industry publications and conferences, consultation with other schools, and meetings and telephone conversations with lenders. During the meetings with lenders a list of 33 questions are asked to better understand the lenders product, services and benefits for the students and their families.  A committee then does a comparative analysis to determine who should be placed on the preferred lender list.  This research is conducted annually.  Criteria for selection of loan products include interest rate, origination fees, default fees, repayment incentives, repayment terms (including opportunity for deferment), lender service to students (including treatment upon default, prevention measures taken by the lender to manage delinquencies, and ease of application and loan approval), and monitoring by lenders of default rates.

#1 – FEDERAL STAFFORD LOAN

This loan may be subsidized, unsubsidized, or a combination of both. Eligibility is determined by Student Financial Services, but the funds are borrowed from a lender. Students can choose any lender, including lenders not on this preferred lender list. Processing fees include a 1% origination fee and a 1% default fee (some lenders and guarantors cover portions of these fees). First-time borrowers are required to complete an entrance interview and a master promissory note (sent by Student Financial Services). Repayment begins six months after leaving school or dropping below half time status.

Subsidized Stafford Loans are awarded based on financial need; the federal government pays interest that accrues while the student is in school.  The unsubsidized loan is not based on financial need; interest that accrues while in school must be paid monthly or deferred and capitalized (added to the original loan balance). The Dept. of Education sets annual and aggregate (i.e. lifetime) limits of the amount of debt a student can obtain from the federal government. Visit studentaid.ed.gov for limits; however, current limits are $3500 for the first year of undergraduate study; $4500 for the second year of undergraduate study; $5500 for the third and fourth years of undergraduate study.

The following is the Johnson & Wales Preferred Lender List.  You do not have to select one of these lenders. We encourage you to research other lenders to find the best rates and services for you and your family.

#2 – PLUS LOAN

The federally sponsored PLUS loan is a low-interest, currently 8.5%, loan for credit worthy parents of dependent undergraduate students who are attending at least half-time in an eligible program.  (Note: Wachovia and Chase are PLUS Endorsers; any credit worthy borrower, including one other than the parent, can apply.) The borrower must complete a mastery promissory note and a loan amount request form. There is a one time 3% origination fee and a 1% default fee annually; therefore, the borrower must request 3% more to cover the fee. (Many lenders will pay the 1% default fee on the borrower’s behalf.) Loan funds are disbursed directly to Johnson & Wales University in three equal disbursements for the fall, winter and spring terms.  The maximum amount borrowed is not to exceed the cost of education less any other forms of financial aid.  Borrowers can be a parent, step-parent reported on the FAFSA, or legal guardian and must be a U.S. citizen.  Repayment begins 60 days after the loan is fully disbursed.  There is a 10 year repayment term.  If a parent is denied the PLUS loan due to poor credit the dependent student can apply for an additional Unsubsidized Stafford Loan. 

The following is the Johnson & Wales Preferred Lender List.  You do not have to select one of these lenders. We encourage you to research other lenders to find the best rates and services for you and your family.

#3 – PRIVATE LOANS

Private Loans, also known as alternative loans, are used by students and families to bridge the gap between the cost of education and the financial aid award.  A credit worthy student may apply for these private loans without a co-signer, but in most cases a co-signer is required.  Johnson & Wales suggests private loan programs once a student and his/her family have exhausted all other payment options. Listed below are loan programs that have been researched by Johnson & Wales, and are believed to have the best package. You may also review other lenders to find the best rates available to you and your family. There are no penalties if you select another lender. Contact a Student Financial Services representative for applications and more. All terms, conditions and rates are subject to change at any point in time.

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