If you apply for financial aid, you may be offered loans as part of your financial award package through Southern.
A loan is money you borrow and must pay back with interest.
If you decide to take out a loan, make sure you understand who is making the loan and the terms and conditions of the loan. Student loans can come from the federal government or from private sources such as a bank or financial institution. Loans made by the federal government, called federal student loans, usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources.
Types of Loans Available
The U.S. Department of Education has two federal student loan programs:
The William D. Ford Federal Direct Loan (Direct Loan) Programis the largest federal student loan program. Under this program, the U.S. Department of Education is your lender. There are two types of Direct Loans available a Southern:
- Direct Subsidized Loans are loans made to eligible undergraduate students who demonstrate financial need to help cover the costs of higher education at a college or career school. These loans do not accrue interest while you are in school.
- Direct Unsubsidized Loans are loans made to eligible undergraduate and professional students but in this case, the student does not have to demonstrate financial need to be eligible for the loan. These loans does accrue interest while you are in school.
How do I get a federal student loan?
To apply for a federal student loan, you must complete and submit a Free Application for Federal Student Aid (FAFSA). Based on the results of your FAFSA, your college will send you a financial aid offer, which may include federal student loans.
Before you receive your loan funds, you will be required to:
- Go to www.studentloans.gov, complete entrance counseling, a tool to ensure you understand your obligation to repay the loan
- Go to www.studentloans.gov, sign a Master Promissory Note (MPN), agreeing to the terms of the loan.
- Go to my.southernwv.edu, accept your award
- Go to your Southern email, send an email from your Southern student account to email@example.com to confirm completion of these steps.
How do I Accept/Decline Student Loans on MySouthern?
- Go to www.southernwv.edu
- Login to MySouthern (use your Southern Email address and password)
- Click "Financial Aid" Tab
- Click "Award"
- Click "Award By Aid Year"
- Select "2016-2017 Aid Year"
- Click on Accept/Decline tab to accept individual Awards.
- For each of the awards you have a drop down box in the "accept award" column. Select either 'Accept' or 'Decline' Partial amounts of an award can be accepted if the student does not wish to accept the full amount. If the student is accepting an amount different than the TOTAL amount listed, please select 'Accept' FIRST and then put teh amount you would like to accept. the amount you decide to accept will be divided into two semesters.
- For example: If a student has $2000 available in a Direct Student Loan for hte year but he/she only wants to accept a $1000 loan, it will be divided into two semesters of $500 per semester. You would select 'Accept" and put 1000 (no docllar sign needed) in the "Accept Partial Amount" box.
- Click "Submit Decision" Any award that is left without a decision will be assumed as declined after thirty days of this notification.
Why should I take out federal loans?
Federal student loans are an investment in your future. You should not be afraid to take out federal student loans, but you should be smart about it.
Federal student loans offer many benefits compared to other options you may consider when paying for college:
- The interest rate on federal student loans is almost always lower than that on private loans—and much lower than that on a credit card!
- You don’t need a credit check or a cosigner to get most federal student loans.
- You don’t have to begin repaying your federal student loans until after you leave college or drop below half-time.
- If you demonstrate financial need, you can qualify to have the government pay your interest while you are in school.
- Federal student loans offer flexible repayment plans and options to postpone your loan payments if you’re having trouble making payments.
- If you work in certain jobs, you may be eligible to have a portion of your federal student loans forgiven if you meet certain conditions.
What should I consider when taking out federal student loans?
Before you take out a loan, it’s important to understand that a loan is a legal obligation that you will be responsible for repaying with interest. You may not have to begin repaying your federal student loans right away, but you don’t have to wait to understand your responsibilities as a borrower.
Be a responsible borrower.
- Keep track of how much you’re borrowing. Think about how the amount of your loans will affect your future finances, and how much you can afford to repay. Your student loan payments should be only a small percentage of your salary after you graduate, so it’s important not to borrow more than you need for your school-related expenses.
- Research starting salaries in your field. Ask your school for starting salaries of recent graduates in your field of study to get an idea of how much you are likely to earn after you graduate. You can use the U.S. Department of Labor's Occupational Outlook Handbook to estimate salaries for different careers or research employment opportunities advertised in the area where you plan to live to get an idea of a local starting salary. You also can use the Department of Labor's career search tool to research careers and view the average annual salary for each career.
- Understand the terms of your loan and keep copies of your loan documents. When you sign your promissory note, you are agreeing to repay the loan according to the terms of the note even if you don’t complete your education, can’t get a job after you complete the program, or you didn’t like the education you received.
- Make payments on time. You are required to make payments on time even if you don’t receive a bill, repayment notice, or a reminder. You must pay the full amount required by your repayment plan, as partial payments do not fulfill your obligation to repay your student loan on time.
- Keep in touch with your loan servicer. Notify your loan servicer when you graduate; withdraw from school; drop below half-time status; transfer to another school; or change your name, address, or Social Security number. You also should contact your servicer if you’re having trouble making your scheduled loan payments. Your servicer has several options available to help you keep your loan in good standing.
How will I receive my loans?
The school will first apply your loan funds to your school account to pay for tuition, fees, books, and other school charges. If any additional loan funds remain, they will be returned to you. All loan funds must be used for your education expenses.
When do I pay back my loans?
After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you are required to begin repayment. During this period, you'll receive repayment information from your loan servicer, and you'll be notified of your first payment due date. Payments are usually due monthly.
What types of loan repayment plans are available?
There are several repayment options available that are designed to meet the individual needs of borrowers. Your loan servicer can help you understand which repayment options are available to you. Generally, you’ll have 10 to 25 years to repay your loan, depending on the repayment plan that you choose. Learn more about your repayment options.
What if I have trouble repaying my loan?
If you are unable to make your scheduled loan payments, contact your loan servicer immediately. Your loan servicer can help you understand your options for keeping your loan in good standing. For example, you may wish to change your repayment plan to lower your monthly payment or request a deferment or forbearance that allows you to temporarily stop or lower the payments on your loan. Learn more about deferment or forbearance options.
Where can I find information about the student loans I've received?
Visit My Federal Student Aid to view information about all of the federal student loans and other financial aid you have received and to find contact information for the loan servicer for your loans.
What is Default Management?
To default means you failed to make your payments on your student loan as scheduled according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan.
What are the consequences of default?
The consequences of default can be severe:
- The entire unpaid balance of your loan and any interest is immediately due and payable.
- You lose eligibility for deferment, forbearance, and repayment plans.
- You lose eligibility for additional federal student aid.
- Your loan account is assigned to a collection agency.
- The loan will be reported as delinquent to credit bureaus, damaging your credit rating. This will affect your ability to buy a car or house or to get a credit card.
- Your federal and state taxes may be withheld through a tax offset. This means that the Internal Revenue Service can take your federal and state tax refund to collect any of your defaulted student loan debt.
- Your student loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney’s fees, and any other costs associated with the collection process.
- Your employer (at the request of the federal government) can withhold money from your pay and send the money to the government. This process is called wage garnishment.
- The loan holder can take legal action against you, and you may not be able to purchase or sell assets such as real estate.
- Federal employees face the possibility of having 15% of their disposable pay offset by their employer toward repayment of their loan through Federal Salary Offset.
- It will take years to reestablish your credit and recover from default.
- It will cause Southern's default rate to increase which could potentially cause them to lose their federal funding.
For more information about Default management please click here.