A variety of loan programs are available to Iowa college and university students. The major programs are sponsored by the federal government, working in partnership with lenders, colleges, and universities.

Generally, the programs are divided into five groups:

• Federal Family Education Loan Program,
• Federal Direct Loan Program,
• Federal Perkins Loan Program,
• Private loan programs, and
• Teacher Forgivable Loans.

Federal Family Education Loan Program (FFELP)

The Federal Family Education Loan Program provides long-term, low-interest loans to students and parents. Commercial banks, credit unions and savings banks make these loans.

Students must be enrolled (or accepted for enrollment) at least half-time at a participating college, university, school of nursing, or vocational, trade, technical, or business school.

To qualify, students also must be in good academic standing, meet Selective Service requirements, and receive determination of eligibility for a Federal Pell Grant.

The Master Promissory Note (MPN) is a student loan application/promissory note that replaces the Common Application/Promissory Note. At some institutions, a borrower may sign a single MPN for the duration of their enrollment. Each subsequent loan is then borrowed using this single promissory note. Check with your college or university to see if you are eligible to use the serial feature of the MPN.

Federal Direct Student Loan Program (FDSLP)

Federal Direct Student Loans are similar to those provided through the Federal Family Education Loan Program. However, with Federal Direct Loans, the U.S. Department of Education is the lender and delivers the loan proceeds through the college or university.

Students (or parents with Federal Direct PLUS Loans) do not send payments to traditional lenders. Instead, payments are sent to a U.S. Department of Education contractor.

Fees and repayment terms:
Fees not to exceed 4% may be deducted from the loan before the proceeds are disbursed. The financial aid offices at participating colleges and universities provide terms.

Private Loan Programs

Many financial institutions offer private (or alternative) student loan programs. These loans are similar to other loans borrowed from commercial lenders. Terms and conditions vary according to each institution's policies and guidelines. In addition, many institutions offer home equity loans that can be used to finance education-related expenses and may offer tax advantages to borrowers.

For information on the availability of alternative loan sources, contact your local lender, the financial aid office at your college or university.

Federal Perkins Loans
 
Federal Perkins Loans are low-interest (5%) loans made by colleges and universities directly to needy students. The specific loan amounts depend on the amount of Perkins funds available to the college or university. 

Visit the financial aid office at your college or university for more information.

Partnership Loan Program
 
The Partnership Loan Program provides a source of loan funds to assist middle-income families in meeting the costs of post-secondary educations. Iowa residents attending eligible schools across the country on at least a half-time basis may be eligible for a Partnership Loan. Borrowers must pass prescribed credit tests.

Federal Parent Loans for Undergraduate Students
 
Federal PLUS Loans are available to parents to pay for the educational expenses of financially dependent undergraduate children. These loans may be used to supplement Federal Stafford Loans.

Any natural or adoptive parent or spouse of a parent who is remarried and whose financial information was reported on the FAFSA of a dependent student enrolled at least half-time in an approved higher education institution is eligible for a Federal PLUS Loan. A credit check will be performed by the lender before loan approval.
 
Loan limits:
A parent may borrow up to the cost of education minus other financial aid for which the student is eligible.

Federal Stafford Loans
 
There are two types of Federal Stafford Loans, subsidized and unsubsidized. If you have a subsidized (need-based) Federal Stafford Loan, the federal government pays the interest on the loan while you are enrolled in school at least half time, in deferment, or in a grace period. However, if you have an unsubsidized (non-need-based) Stafford Loan, you are responsible for the interest during in-school and deferment periods. All other provisions of the two loans are identical unless otherwise noted.

Before you can receive a Federal Stafford Loan, a school must determine your eligibility for a Federal Pell Grant. This process also determines your eligibility for a subsidized Federal Stafford Loan.
 
Fees, rates, and repayment terms:
Fees not to exceed 4% may be deducted from the loan before you receive the proceeds. The Iowa College Student Aid Commission waives the guarantee fee (1%) for borrowers and some lenders waive the remaining 3% origination fee.

Federal Stafford Loans have a variable interest rate that may not exceed 8.25%. Repayment on Federal Stafford Loans begins six months after you graduate, drop to less than half time enrollment, or withdraw.

Your lender will most likely accrue and capitalize the interest on any unsubsidized Federal Stafford Loans (add the interest to the principal), increasing the amount of principal you will have to repay. The repayment term is generally ten years.

Stafford Loan Deferment, Forbearance, Discharge, and Cancellation Benefits

Generally, if you accept loans to assist with education expenses, you are obligated to repay the principal and interest according to the terms and conditions of the loan. Once in repayment, there may be times when you are entitled to temporarily postpone your Stafford Loan monthly payments. Deferment and forbearance allow you to postpone your scheduled monthly payments. You should always pursue deferment or forbearance opportunities with your lender or servicer rather than miss a monthly payment.

Stafford Loan discharge and cancellation benefits are available to some borrowers. The following chart describes conditions when Stafford Loans may be discharged or cancelled. You should contact your lender or servicer to determine eligibility for loan discharge or cancellation benefits when you begin repayment of your Stafford Loans.