Student Loans

Federal Loans

The federal student loan is a low interest loan with a fixed interest rate of 3.4-percent for disbursements made on or after July 1, 2012 through June 30, 2013 for an undergraduate subsidized student loan. An unsubsidized loan will maintain an interest rate of 6.8-percent for undergraduate and graduate students. 

• Subsidized
  • Need-based as determined by the FAFSA, other aid sources and educational costs
  • The U.S. Department of Education pays the interest on the loan while the student is enrolled at least half-time
• Unsubsidized
  • Not need-based
  • The student pays the interest while in school or it can be capitalized*

Borrower limits for federal loans based on grade level and dependency status
(U.S. Department of Education)

Note (Effective July 1, 2008): Dependent undergraduate students whose parent is denied a Parent PLUS Loan have increased eligibility for unsubsidized loans. Freshman and sophomore students may borrow a maximum of $6,000 in unsubsidized loan funds in addition to their base amount listed above. Junior and senior students may borrow a maximum of $7,000 in unsubsidized loan funds in addition to their base amount listed above.

*Capitalized interest is daily interest that is calculated on a loan's unpaid principal balance at the rate specified in the promissory note.  Unlike accrued interest, capitalized interest is added to the principal loan amount and paid at a later time.

Liberty University is not responsible for returning any portion of a loan that was disbursed to a student or parent directly (e.g., as a result of a credit to the student’s account) before the request for cancellation was received (1011 FSA Handbook, Volume 4, Chapter 1, 4-4).

If a student or parent borrower decides to return Direct Loan funds, he or she can send the check to:

            U.S. Department of Education
            Attention:  Payment Center
            P.O. Box 530260
            Atlanta, GA 30353-0260

The borrower must include a cover note stating whether the funds are for a loan payment or for canceling (inactivating) the loan.  The note should indicate which loan or loans the funds should be applied to, and in what amounts (if repayment is being split between loans).

Aggregate Loan Limits
Effective July 1, 2008
 

• Undergraduate dependent students: $31,000 (no more than $23,000 of which can be subsidized)
• Undergraduate independent students: $57,500 (no more than $23,000 of which can be subsidized)
• Graduate students: $138,500 (no more than $65,500 of which can be subsidized)

PLUS Loans

The Federal Parent PLUS Loan is for credit-worthy parents of dependent undergraduate students. The amount is based on educational costs minus any other financial aid.

Students whose parents are denied the Parent PLUS Loan due to adverse credit may be eligible to receive an additional $4,000 or $5,000 in unsubsidized loans. The Parent PLUS Loan interest rate is fixed at 7.9-percent for loans disbursed on or after July 1, 2012, and re-payment usually begins 60 days after the final disbursement of the Parent PLUS Loan.

Liberty University is not responsible for returning any portion of a loan that was disbursed to a student or parent directly (e.g., as a result of a credit to the student’s account) before the request for cancellation was received (1011 FSA Handbook, Volume 4, Chapter 1, 4-4).

If a student or parent borrower decides to return Direct Loan funds, he or she can send the check to:

            U.S. Department of Education
            Attention:  Payment Center
            P.O. Box 530260
            Atlanta, GA 30353-0260

The borrower must include a cover note stating whether the funds are for a loan payment or for canceling (inactivating) the loan.  The note should indicate which loan or loans the funds should be applied to, and in what amounts (if repayment is being split between loans).

Private Loans

Check out Private loans at ELM Select.

Private loans are not part of the federal loan programs and should be used as a last resort. Liberty encourages all students to first consider the Federal Student Loan programs, as they offer the lowest fees and interest rates. However, if those loan programs do not cover the student's educational expenses, they may want to consider applying for a private loan.

Private loans that are not certified by Liberty University are called Direct-to-Consumer (DTC) loans. Students should be read the terms of DTC loans very carefully and be aware that DTC loans may affect other aid eligibility when they are applied to the student's account.

Direct-to-Consumer Loans (DTC)

Students apply for a Direct-To-Consumer Loan (DTC loan) by directly contacting the lender. Liberty University's Financial Aid Office is not initially notified of DTC loans, nor is it part of the process to certify eligibility. Since, however, the U.S. Department of Education requires Liberty University to acknowledge the receipt of the loan and regard it as a resource paid to the student's account, Liberty may need to adjust other sources of financial aid to accommodate the DTC loan amount.

Because DTC loans can negatively affect other financial aid, students are encouraged to exhaust all federal sources first. 

Average Indebtedness

As of May 2007, Liberty students who have graduated borrowed an average of $21,171 in loans through various federal and private loan programs. Using an estimated 7-percent interest rate, the student would make payments of $246 per month for a 10-year period.

Students should seek out loan forgiveness programs such as the Southside Tobacco Loan Forgiveness Program to look toward ways on saving during repayment.