Learn About Student Loans

What is a Student Loan?

Student loans are lent credits that aid in the payment for higher education. Loans are paid back over select periods of time with interest. Student loans can come from a myriad of sources, depending on the type.

What are the types of Student Loans?

Federal Loans

Federal student loans are lent credits from the government (The US Department of Education) that aid in the payment for higher education. They have a plethora of subtypes, including:

  • Direct Subsidized Loans - Direct subsidized loans are lent credits that do not accrue interest during the student's time in undergraduate study. Eligibility for direct subsidized loans are based on a myriad of factors, including, but not limited to: citizenship, financial need, institution of study, etc.
  • Direct Unsubsidized Loans - A Direct Unsubsidized Loan are lent credits that students can apply for regardless of financial need. Eligibility for direct unsubsidized loans are based on a myriad of factors, including, but not limited to: enrollment in an institution that participates in the the direct loan program, being in either an undergraduate, graduate, or professional degree, etc.
  • Direct PLUS Loans - Direct PLUS loans are lent credits to either students or guardians/support networks of college students. Eligibility for direct PLUS loans are based on a myriad of factors, including, but not limited to: citizenship, credit history, being in good standing with The US Department of Education, etc.
  • Direct Consolidation Loans - Direct consolidation loans combine all federally lent credits into one loan with a single interest rate and monthly payment. Eligibility for direct PLUS loans are based on a myriad of factors, including, but not limited to: having at least one federal loan, etc.

In order to qualify for Federal Loans, you will need to fill out the Free Application for Federal Student Aid (FAFSA). This form helps the Department of Education identify what loans and aid you qualify for based upon your household income, the institution you are attending, among other factors.

Private Loans

Private loans, also known as alternative loans, are lent credits from private lenders. Private loans have a different application processes. Here are some things to consider for your application:

  • Past credit history and income will often be a factor in your likelihood to receive a loan
  • Interest rates and fees based upon your information may be added
  • Co-signers may be required
  • Interest rates may change overtime

How do I know which loan type is right for me?

All federal loan types, as well as private loans have their own benefits and detractions. It is important to consider the following:

Federal Loans

Pros:

  • Federal loans are typically have a fixed interest rate
  • Federal loans will typically not require you to have past credit
  • The are many options for payment plans to repay federal student loans

Cons:

  • Financial need often bars certain students from receiving federal loans
  • Limits are imposed on the amount a borrower can be lent
  • Student loan debt

Private Loans

Pros:

  •  Private loans will often allow borrowers to be lent a higher amount of funding
  • The applications process for private loans is quick and simple
  • Financial need is typically not a requirement for private loans

Cons:

  • Private loans are typically not eligible for loan forgiveness
  • Repayment is typically at a higher rate than federal student loans
  • Student loan debt

 

Student Loan Timeline

Student Loan Timeline

Student Loan Application

Applying for student loans is the beginning of the Student Loan Timeline.

  1. FAFSA Submission
    • Complete your free FAFSA form online to see what financial aid you qualify for.
  2. Financial Aid Award
    • UChicago will offer you a financial aid award based on your FAFSA. UChicago guarantees free tuition to students who are the first in their families to attend college and to families with incomes under $125,000 per year (with (typical assets). Families earning less than $60,000 per year (with typical assets) will have tuition, fees, and standard room and meals covered by financial aid.
  3. Loan Acceptance
    • Accept the student loan amounts that you would like to take on.
  4. Entrance Counseling
    • Complete the online entrance counseling on the Federal Student Aid website if you are borrowing for the first time.
  5. Master Promissory Note (MPN)
    • Sign your MPN loan agreement electronically.

Student Loan Disbursement

Your student loans will be disbursed to the University of Chicago.

  1. Loan Certification
    • UChicago will certify your loans.
  2. Disbursement to School
    • The UChicago Office of Financial Aid receive your loans for disbursement.
  3. Refund to Student
    • The UChicago Office of Financial Aid will refund any excess loans to you.

In-School Period

While you are studying at the University of Chicago, your loans will be deferred and accrue interest. 

  1. In-School Deferment
    • Your student loans are automatically deferred while you are enrolled at the University of Chicago. They may accrue interest during this time.

Student Loan Grace Period

  1. Grace Period Activation
    • Your grace period will begin once you have departed from the University of Chicago and will last for 6 months thereafter.
  2. Interest and Repayment Preparation
    • After your grace period ends, your loan will have accrued interest, and you will be able to select a repayment plan.

Student Loan Repayment (Plans)

  1. Repayment Plan Selection
    • Purpose: Choose a repayment plan that fits your financial situation.
    • Action: Options include Standard, Graduated, Extended, Income-Driven Repayment (IDR) plans, etc.
  2. Making Payments
    • Purpose: Fulfill student loan repayment obligations.
    • Action: Regular monthly payments begin based on the chosen plan.
  3. Managing Repayment
    • Purpose: Keep payments current to avoid penalties.
    • Action: Set up autopay or make manual payments, and keep track of your balances.

Student Loan Deferment and Forbearance

  1. Deferment
    • Purpose: Temporarily halt payments in specific situations (unemployment, economic hardship, etc.).
    • Action: Apply through the loan servicer. Subsidized loans do not accrue interest during deferment.
  2. Forbearance
    • Purpose: Temporarily reduce or pause payments.
    • Action: Request through the loan servicer. Interest accrues on all loan types during forbearance.

Student Loan Forgiveness, Cancellation or Discharge

  1. Public Service Loan Forgiveness (PSLF)
    • Purpose: Forgive remaining debt after 10 years of qualifying public service employment and payments.
    • Action: Meet criteria and submit PSLF application.
  2. Teacher Loan Forgiveness
    • Purpose: Forgive up to $17,500 for teachers in low-income schools.
    • Action: Complete the required service and submit the application.
  3. Total and Permanent Disability Discharge
    • Purpose: Discharge loans due to total and permanent disability.
    • Action: Provide necessary documentation and apply.
  4. Other Discharges
    • Purpose: Various circumstances like school closure, false certification, etc.
    • Action: Follow the criteria and apply as needed.

Student Loan Repayment Completion

  1. Final Payment
    • Purpose: Fulfill the full repayment obligation.
    • Action: Make the last payment and ensure the loan balance is $0.
  2. Receive Paid-in-Full Letter
    • Purpose: Confirm loan repayment completion.
    • Action: Keep the letter for records.

Avoiding Student Loan Default 

  1. Default Consequences
    • Purpose: Severe penalties, including damage to credit score, wage garnishment, and lawsuits.
    • Action: Seek help early if you can't make payments.
  2. Default Resolution
    • Purpose: Avoid or resolve default status.
    • Action: Contact the loan servicer to explore options like repayment plans, loan rehabilitation, or loan consolidation.