Below are some of the most common questions Student Financial Services receives about student loans. If you have questions not listed here, call 413.662.5219 or email FinAid@mcla.edu.
This FAQ section is specifically geared toward student loan questions. We also offer a general financial aid FAQ and a student accounts FAQ.
A student loan is a federal, state, or private loan that is to be specifically used towards education. Often, a student loan offers a better interest rates and repayment options than a personal loan.
Student loans are certified by Student Financial Services to ensure that a student is attending MCLA and that the amount requested does not exceed the total cost of attendance.
Everyone's financial situation is different, so it's hard to say whether you should borrow a student loan. If you get your bill and there is a balance after your grant aid that you are unable to pay in full by the due date or finance through the monthly payment plan, you may want to consider pursuing a loan. You should give Student Financial Services a call at 413.662.5230 or StudentAccounts@mcla.edu if you want a ballpark of what you will owe after aid.
Student Financial Services cannot advise what loan company you should choose. Private loan lenders offer various rates and benefits based on credit history and co-signer credit history.
What we can advise is that you consider accepting any federal student loans (subsidized or unsubsidized) first as the interest rates are lower, fixed, and offer many other benefits. These loans would be in your (the student) name only. If you want to pursue a private student loan after that, you could shop around.
A federal student loan is funded by the government, has terms and conditions set by law, and has benefits such as low interest rates and flexible repayment options.
Private student loans are made by private organizations and have terms and conditions that are set by the lender. Many of these loans are credit based and require a credit-worthy co-signer. Private student loans are generally more expensive than federal student loans.
Subsidized and unsubsidized loans are federal student loans that you may qualify for when you complete the FAFSA. (These loans are sometimes called Stafford Loans or Direct Stafford Loans.) Both of these loans are long-term and low interest. For the 2022-2023 academic year, both undergraduate loan types have a fixed interest rate of 4.99% for the life of the loan. (Note: Interest rate for future loans is subject to change every year by the Department of Education.)
A subsidized student loan does not begin to accrue interest while you're in school, during your 6 month grace period, or during a period of deferment.
An unsubsidized student loan begins to accrue interest after it disburses on your student account. Interest payments are not required while you're in school, during your 6 month grace period, or during a period of deferment, but the interest will be added to the principal balance. (Students can choose to make interest payments while in school. To do this, you would contact Student Financial Service to find out who your loan servicer is in early October.)
Because of this difference, the unsubsidized student loan is less favorable than the subsidized student loan, but it is still is more favorable than many private, credit based loans.
Aside from the interest, both loans offer the same fixed interest rate, origination fee, and repayment terms.
For the 2022-2023 academic year, both undergraduate loan types have a fixed interest rate of 4.99% for the life of the loan.
(Note: Interest rate for future loans is subject to change every year by the Department of Education.)
Yes. Before any subsidized/unsubsidized loan is applied against your account, your loan servicer charges an "origination fee." This is a small fee that the loan servicer collects for processing your loan. When a federal student loan is credited on your student account as a payment, the origination fee is taken into account.
As of October 1, 2021, the origination fee is 1.057% for subsidized/unsubsidized loans. This percentage comes off of your loan before MCLA receives your funding. (For example, during the 2022-2023 academic year, a $1,000.00 loan would net $990.00 after the origination fee.)
A federal parent PLUS loan also has an origination fee. As of October 1, 2021, the fee is 4.228%.
Origination fees should be factored it when borrowing federal loans. As a tool for planning purposes, we have a calculator which you can use to estimate the origination fee.
Some loan servicers do charge a loan/origination fee. Each private loan servicer is different and it would be up to the potential borrower to investigate this.
Entrance Counseling is a requirement set by the Department of Education that all new federal loan borrowers must complete. It educates you on your rights and responsibilities as a loan borrower. It is also to help you understand what it means to accept a loan.
It takes about 30 minutes to complete. No federal student loan can be noted on your account until you complete your Entrance Counseling.
The Master Promissory Note (MPN) is a legal document in which you promise to repay your student loans and any accrued interest/fees to the U.S. Department of Education. It also explains the terms and condition of your loan.
The MPN is good for a period of up to 10 years.
You can complete your Entrance Counseling at any time, but you cannot complete your Master Promissory Note (MPN) until MCLA certifies your loan. This typically begins to happen in early June.
We will notify you when your loan has been certified. We will include instructions on how to complete your Entrance Counseling and MPN.
If you are borrowing federal loans (an unsubsidized or subsidized student loan,) you are not required to make payments while you're in school, during your 6 month grace period, or during a period of deferment. Some students like to pay down their student debt while in school, but it is not required.
Many private student loans do not require payments while a student is in school, but some do depending on the loan application. If you will borrow/have borrowed a private student loan, you may want to reach out to your loan servicer to see if payments are expected.
Once you graduate, drop below half-time enrollment, or leave school, your federal student loan goes into repayment. However, for unsubsidized and subsidized student loans, there is a 6 month grace period that kicks in. This time allows you to get financially settled before you begin making your payments.
If you are unable to make payments after your grace period ends, you make arrangements with your servicer to reduce or stop your payments. This may include an income driven repayment (IDR) plan, forbearance, or deferment.
Many private loans have their own grace period, but borrowers should reach out to their loan servicer for more information.
Interest is what a servicer charges, typically per month, on your unpaid principal balance of your student loan. For some loans, unpaid interest gets added to the principal balance, which can increase your student loan balance.
Many student loans, especially federal loans, offer low interest rates in comparison to personal loans. Some federal student loans do not charge interest while you're in school. It's important to shop around before borrowing a student loan to find the most favorable rates.
Fixed interest is an unchanging, set rate that a company charges on a loan. Such rates are fixed for either the life of the loan or a period of time. Payments on fixed rate loans are predictable. Subsidized/unsubsidized student loans have a fixed interest rate for the life of the loan.
Variable interest is a rate that can fluctuate during the loan period. These rates can change monthly, quarterly, or yearly, making the payments less predictable. The rates can fluctuate for many reasons, such as market value, payment history, or the life of the loan. Variable rates can be more attractive to borrowers than fixed rates as they are sometimes lower, especially in the beginning.
There is more information on fixed and variable student loans here.
To see if you qualify for the unsubsidized or subsidized student loans, you must complete your FAFSA and financial aid file.
Many private, credit-based loans do not require a FAFSA.
If you are offered loans in your financial aid package, you must accept or decline them on Banner Self Service.
Additionally, first time federal loan borrowers must complete mandatory entrance counseling and a Master Promissory Note (MPN) on StudentAid.gov. Federal loans will not be noted on the account as a payment until these requirements are fulfilled.
If you accepted your federal student loans and they have not disbursed yet/it has been less than 14 days since they disbursed, you must email FinAid@mcla.edu from your MCLA email address and state that you would like them canceled. They may be available to you later that academic year, should you change your mind.
If you declined your federal student loans but changed your mind, you can email FinAid@mcla.edu and request to have them reinstated. If you are a first time federal loan borrower, you will need to complete mandatory entrance counseling and a Master Promissory Note on StudentAid.gov.
Student Financial Services can only reinstate declined loans from the current academic year.
If you do not want your loans in the fall semester, you must put into writing that you do not want them for full year. This would need to be done via your MCLA email address or in person in Student Financial Services. If you decide you want the loans for the spring semester, you will need to put into writing as it gets closer that you would like to have them reinstated for the spring semester.
Student Financial Services can only reinstate declined loans from the current academic year.
Most private student loans are credit-based and will require a co-signer. It is very hard for someone with no/poor credit history to apply for a credit-based loan. Similarly, a co-signer with good credit may be approved for higher loan amounts and/or lower interest rates. Most traditionally aged college students need a co-signer.
Some private loan companies offer a clause for "borrower release." This means that after a certain number of payments, a co-signer could be removed as borrower and be no longer legally obligated to pay the loan back.
A co-signer is a person who applies jointly for a loan. Co-signers are typically required for new borrowers/borrowers with no or poor credit history. If a borrower is unable to pay, the co-signer is legally responsible to pay the loan back. Failure to pay the loan back affects the co-signer's credit, too.
Most traditionally aged college students need a co-signer. Even if you do not need one, it is worth considering one, as co-signers can encourage loan companies to offer better terms, interest rates, and higher loan amounts.
Accepted loans don't immediately get paid out. If your loan was disbursed, it means that MCLA has received the loan funding and has applied it against your account. If you now have an overpayment on your account, we will issue you a refund about a week later.
We send out emails when we disburse a loan on your account and to notify you of your 14 day period of cancellation.
If you have a refund after all your financial aid, including loans, has been applied, Student Financial Services will issue you a refund roughly 6 weeks after the semester begins. You will be notified when your refund has been processed and available.
If you receive a refund from a loan, you can use it towards your expenses that either directly or indirectly affect your education. You can also apply it toward a future semester and reduce your future borrowing.
If you do not need a refund from your federal student loans but received one, we strongly encourage you to either pay down or reduce your future borrowing. You can contact Student Financial Services at 413.662.5219 to discuss applying it towards the next semester or paying down your student loans.
Once a year, we send a "debt letter" to students who have borrowed student loans at MCLA to notify them of their cumulative balances. You don't need to necessarily do anything with it or pay anything back once you get it, but we send them out to students to be mindful of their borrowing.
The point of the letter is to encourage financial literacy. Some students borrow every year without realizing how quickly it adds up. The debt letter may encourage you to save money to reduce the loan amounts needed or seek out scholarships.
If you have any questions about your letter, contact Student Financial Services at 413.662.5219.