Award Notifications and Choosing a Lender: UA College of Medicine

Award Notifications and Choosing a Lender

Award Notifications

Choosing a Lender
Understand the Terms of the Various Loans

Award Notifications

Award notifications are sent by email to your UA email account. Instructions will be given to you to access your award offer using your UA PIN number. The notifications will probably be sent in April or May 2008. In May or June, we expect to notify medical students to apply for the Federal Stafford Loan, if you wish to do so. Keep an eye on your UA email. If you do not yet have a UA email account, the award notification will be sent by U.S. mail.

Choosing a Lender

When it has been determined by the Office of Student Financial Aid that you are eligible for a Subsidized and/or Unsubsidized Federal Stafford Loan, if you want to borrow you will need to make a choice about a lender. The University of Arizona automatically sends qualified students a list of lenders participating in Electronic Fund Transfer (EFT) with the University of Arizona. (EFT eliminates the need to endorse a paper check; the funds are deposited directly into the borrower's University of Arizona student account). You will be provided with a web address which can be used to review the list of lenders and lender discounts, and will allow you to apply for the loan. You may borrow through any lender you wish who participates in the federal loan programs. Please contact the College of Medicine Financial Aid Office if you have any questions about the process.

Notice of Disclosure for UA Lender Lists

https://financialaid.arizona.edu/loans/disclosure.aspx

Considerations:

It is generally advisable to obtain your loans from one lender for ease in the repayment phase of your borrowing (e.g. if you have previously borrowed under the Federal Stafford Loan Program, it is suggested that you borrow your Federal Stafford Loan through the same lender).

The terms and conditions of the Federal Stafford Loans and the interest rate are determined by federal law and do not vary by lender.

Look for a lender that capitalizes interest only once at repayment (i.e. after uninterrupted periods of grace and deferment)

For College of Medicine students, consideration might be given to the lender's offering private loans in addition to the Federal Stafford Loan, particularly the "residency and relocation" loan. Most medical students in their 4th year require funding to meet costs associated with interviewing for residency positions and relocating after graduation. These expenses cannot be added to your cost of attendance. Several educational lenders have developed private loans specifically to assist their medical student
borrowers to meet these expenses. Be sure that the loan does not require school certification of financial aid eligibility. The application and disbursement of funds must be between you and the lender. These loans do require a credit check. Please do not borrow more than you need!

If the lender offers a private loan to meet residency interviewing and relocation expenses, do they offer combined billing with the Federal Stafford Loan during repayment?

Does the lender have a good reputation for service? What has been the experience of borrowers who are in repayment with that lender?

There are fees charged to process the Federal Stafford Loan and some other types of loans; generally these are deducted from the loan when funds are disbursed to you. At this writing, the maximum origination fee on the Federal Stafford Loan is 1.5% of the loan amount. The default fee is 1%. The UA lender list indicates how much the lender will charge for the origination fee that academic year, according to information provided by the lender. If you choose a lender that charges fees and the cost of those fees mean that you are short of funds in your budget, you may request reevaluation of your cost of attendance to add the fees actually incurred.

Lender Discounts: lenders compete for student loan business by offering discounts, generally effective for loans made that specific academic year. Sometimes these are called "Borrower Benefits." One type of discount or benefit is for the lender to cover the fees on the loan or rebate the fees. Another is to offer a discount if you make your payments on time. If the lender you choose offers a discount, keep a copy in your records and be sure to take advantage of the terms in repayment. If you have been offered a discount for on-time repayment and you are late one time, you could lose that benefit forever!   We suggest that during the repayment phase of your loans, you consider paying your loans electronically, using automatic debit, and also set up overdraft protection on that account to assure you are not late. Some lenders offer a discount to the borrower for using auto debit during repayment. The lender discounts can represent a significant savings to you, so they are important to track and utilize during repayment. Most borrowers do not achieve these savings because they do not make all their payments on time and a high percentage are reported as making their first payment late. Therefore, the upfront discount of fees are valuable because of the timing of this discount. Please be aware that some lenders post disclaimers that discounts are subject to change without notice. Also, you need to know that if you replace the loan with a Federal Consolidation Loan, these lender discounts will go away because you will have a new loan with new terms.

Please note that due to changes in federal law, effective October 1, 2007, cost to lenders participating in the federal loan programs went up, and lenders subsidies went down. Therefore, you will find that discounts in effect for loans made after October 1, 2007 have often changed from those offered previously or have been eliminated. Some lenders have dropped out of the federal loan programs or are no longer making private loans. Lenders are required to notify you if they sell your loans.

For more information regarding "Loan Discount Caveats", and "Tips for Evaluating Loan Discounts", see http://www.finaid.org/loans/studentloandiscounts.phtml

If you have previously borrowed from a lender, we generally advise you not to switch lenders based upon the fees or lender discounts alone. Medical residents, in particular, will find it easier in repayment to have their Federal Stafford Loans with one lender. Residency is very time-intensive (e.g. you may be expected to work 80 hours per week) and it may be easier to manage your loans if they are all with the same agency.

Understand the Terms of the Various Loans

See Educational Loan Programs to compare some of the loans for which you are applying when you file your financial aid application. In addition to the loans listed, some students may be offered a Federal Perkins Loan. Funding for this program is very limited. The Federal Perkins Loan has very favorable terms since there are no origination or guarantee fees, there is no interest accruing during school, and repayment is at a 5% fixed interest rate. Federal Perkins and the Subsidized Federal Stafford Loan have more favorable terms than the Unsubsidized Federal Stafford Loan, the Federal Graduate PLUS, and commercial private educational loans. In the case of these latter loans, interest is charged from the date the lender disburses the money and is capitalized (added to the principal) according to the policy of your lender. Private loans are more expensive since interest is generally not capped, or is capped at 18%. Compare this to the 6.8% fixed interest rate of the Federal Stafford Loan Program and the 8.5% fixed interest rate on the Federal Graduate PLUS Loan.

When you receive an award notice, please be aware that you do not have to apply for your full loan eligibility immediately (e.g. Unsubsidized Federal Stafford Loan) and may wish to review your situation with your College of Medicine Financial Aid Counselor. If you believe you can meet your expenses on a lesser loan than is offered, please only apply for that amount. You can apply for an increase during the year unless scholarship or other funding has replaced that eligibility. You are under no obligation to apply for a loan at all! (Please refer to: How Much Should You Borrow?)

If your financial aid offer is not sufficient and you will need additional funding, contact the College of Medicine Financial Aid Office to see whether this will be possible and for additional guidance.

Applying for the Federal Stafford Loan

Return to Financial Aid Home