National College of Natural Medicine (NCNM) currently processes Federal Stafford and Grad PLUS loans through the Federal Direct Loan program, in which borrowers obtain loan funds directly from the U.S. Department of Education.
Types of Loans
Ninety-eight percent of students attending NCNM find it necessary to receive some form of financial assistance. However, loans comprise the majority of financial aid at NCNM. Student loan borrowers must sign a Master Promissory Note (MPN) which details the terms of their agreement with the Department of Education. As a condition of signing the MPN the student agrees to restrict use of student loan funds to pay for current year educationally related expenses only and as such, agree to immediately repay any loan proceeds that cannot be attributed to educational expenses for attendance, on at least a half-time basis, at NCNM.
The maximum amount of graduate student education loans available will depend partially upon a student’s eligibility as well as the student’s program(s) of enrollment. The student should keep in mind that loans are not designed to meet the total student budget to attend programs at NCNM, and that the money borrowed will have to be repaid with interest. All students interested in federal loans must complete and submit the Free Application for Federal Student Aid (FAFSA).
Direct Loan Interest Rates Effective July 1, 2015.
Now that Congress has passed and President Obama has signed the Bipartisan Student Loan Certainty Act of 2013. The new law amends the Direct Loan interest rate section of the Higher Education Act of 1965, as amended (the HEA).
Specifically, the new law amends section 455(b) of the HEA to provide new formulas for the determination of interest rates for all Direct Loan types. The new formulas apply to all Direct Unsubsidized Loans, and Direct PLUS Loans (made to parents and to graduate/professional students) for which the first disbursement is made on or after July 1, 2015.
Interest rates effective July 1, 2015
2015-2016 Federal Direct Student Loans Interest Rates Effective for Loans First Disbursed on or after July 1, 2015 and prior to July 1, 2016
|Loan Type||Borrower Type||Index 10-Year Treasury Note||Add-On||Fixed Interest Rate|
|Direct Subsidized Loans||Undergraduate Students||2.237%||2.05%||4.29%|
|Direct Unsubsidized Loans||Undergraduate Students||2.237%||2.05%||4.29%|
|Direct Unsubsidized Loans||Graduate Professional Students||2.237%||3.60%||5.84%|
|Direct PLUS Loans||Parents of Dependent Undergraduate Students and Graduate Professional Students||2.237%||4.60%||6.84%|
Interest Rate For the Life of the Loan
The interest rate for a loan, once established, will apply for the life of the loan – that is, the loan will be a fixed-rate loan. As a result, it is likely that many borrowers will have a set of fixed-rate loans, each with a different interest rates.
Federal Loan Servicer Preparation and Notification to Borrowers
Since the amended law specifically provides that the new interest rate determinations apply “retroactively” to July 1, 2013, Federal Student Aid has been working with our federal loan servicers to ensure that: (1) they are prepared to implement the new rates for new Direct Loans they receive; (2) they reset interest rates for all loans first disbursed on or after July 1, 2013 that they have already received for servicing; and (3) they notify all affected borrowers of the interest rate change. While this will be accomplished without any action on the part of schools or the students/borrowers, the Department’s Direct Loan servicers will send revised information to borrowers who had been provided interest rate information based on the law prior to enactment of the Bipartisan Student Loan Certainty Act of 2013.
Interest Rates for Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans
Interest rates will be established each year for Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans for which the first disbursement is on or after July 1 through the following June 30. The rate will be the sum of a uniform “index rate” plus an “add-on” that varies depending on the type of loan (Subsidized/Unsubsidized or PLUS) and the borrower’s grade level (undergraduate or graduate/professional). Thus, interest rates will be the same for Direct Subsidized Loans and Direct Unsubsidized Loans taken out by an undergraduate student, with a different rate for Direct Unsubsidized Loans taken out by a graduate/professional student1 and for PLUS Loans taken out by parent borrowers or graduate/professional student borrowers.
Under the law, the index rate is determined each year as the “high yield of the 10-year Treasury note” auctioned at the final auction held prior to the June 1 preceding the July 1 of the year for which the rate will be effective, plus a statutorily defined “add-on”. As noted the add-on will differ depending on the type of loan and the student’s grade level. Each loan type also has a maximum interest rate (or cap).
The interest rate for a loan, once established, will apply for the life of the loan – that is, the loan will be a fixed-rate loan. As a result, it is likely that many borrowers will have a set of fixed-rate loans, each with a different interest rate.
Federal Direct Unsubsidized Stafford Loan
This loan accrues interest immediately upon disbursement and during the grace period. Students are offered the option of paying the interest while they are in school, or they may capitalize the interest (add the interest to the principal) when the loan enters repayment. Maximum unsubsidized loan amounts are determined by subtracting all financial aid received from the estimated COA budget, as well as considering the student’s eligibility and program of enrollment.
Aggregate Graduate Loan Limits for Master Degree Programs
The maximum amount of student education loans is limited federally to $20,500 per nine-month period (academic year), and cannot exceed a maximum borrowing amount of $138,500—of which no more than $65,500 can be in subsidized loans for students who received this loan type prior to July 1, 2012. This aggregate limit includes undergraduate loan debt and applies to students enrolled solely in the Master Degree Programs.
Extended Loan Limits and Aggregate Cap for Naturopathic Degree Students and Dual Track Cap
The Secretary of Education has added naturopathic medicine as an approved discipline eligible for increased unsubsidized Stafford amounts, if the program is offered by a domestic institution that is accredited by the Council on Naturopathic Medical Education (CNME). The additional amount, up to $20,000 if the academic year of the program is nine months in length and up to $26,667 if the academic year is 12 months in length, can be awarded only to students enrolled in a program that leads to a Doctor of Naturopathic Medicine (NMD) degree, Doctor of Naturopathy (ND) degree, or a Doctor of Naturopathic Medicine (ND) degree. In either case, loan limits cannot exceed the student’s cost of attendance budget. The new aggregate limit for eligible students is $224,000—of which no more than $65,500 can be in subsidized loans for students who received this loan type prior to July 1, 2012. These limits include all loans made to the student for all attendance, including loans received as an undergraduate student. Students enrolled in the dual track are eligible to receive the extended loan limits as long as they have not completed their ND degree program.
Federal Direct Graduate PLUS Loan
This is a federal fixed rate loan that can be used to help cover the costs of attending college for graduate students who are enrolled at least half-time. You must be either a U.S. citizen or permanent resident. A credit check is required; however, income or assets and credit scores are not considered as part of the eligibility criteria. Before applying for a Graduate PLUS Loan, a graduate or professional student must also apply for and the school must determine the student’s eligibility for the maximum annual Federal Unsubsidized Loan amount. We expect that a Graduate PLUS applicant would wish to receive a Federal Graduate PLUS Loan to supplement the maximum Federal Unsubsidized Loan amount that he or she is eligible to receive. However, a graduate or professional student is not required to receive Federal Unsubsidized Loan funds as a condition for receiving a Federal Graduate PLUS Loan. For more information about this loan, please contact the Financial Aid Office.
Obtaining Loan Funds for Next Year
As in prior years, you must:
- Complete the FAFSA (Free Application for Federal Student Aid)
- Provide any documents requested by our office that were included in your award packet.
- You will then have to complete a new Master Promissory Note for the Direct Loan program before the Department of Education will electronically disburse your funds to NCNM. Note: If you will borrow from BOTH the Stafford and Grad PLUS programs, you will need to complete a separate MPN for each loan program.
- You can complete your Direct Loan MPN online at www.studentloans.gov. You will need the same FSA ID that you used for your FAFSA to electronically sign the note. If you do not have an FSA ID, you may obtain one via www.fsaid.ed.gov.
- Students who are borrowing for the first time will need to complete an Entrance Counseling Session. Continuing students who currently are participating in the Stafford Loan Program do not have to complete a new Entrance Counseling session with the Direct Loan Program.