All federal education loans are now administered through the William D. Ford Direct Loan (DL) program. Under the DL program, the government or U.S. Department of Education (not banks or other private financial institutions) serves as the students’ lender/owner for the life of their loans. All students borrow through the DL program must complete the online ‘Entrance Loan Counseling’ when applying for the first loan at Whittier Law School. The DL program offers two types of loans: (1) Stafford–Subsidized and Unsubsidized and (2) Graduate PLUS.
This is need-based loan and it is available up to $8,500 each school year. The government pays the interest on behalf of a student during periods of enrollment as well as throughout the 6-month grace period which precedes repayment. Unfortunately, this loan type will no longer be available to graduate/professional students beginning July 1, 2012. The Budget Control Act of 2011 (which was signed into law on August 2, 2011) will eliminate the interest subsidy on all subsidized Stafford loans for graduate students, regardless if a student/borrower is in school, in the post-school grace period, and/or during any authorized deferment period.
The DL unsubsidized Stafford loan is not need-based and students are responsible for paying any interest that accrues while in school. Students have the option allowing the interest to capitalize during enrollment, grace, and deferment periods. Students may borrow up to a combination of $20,500 of Stafford loans each academic year, if eligible ($8,500 of subsidized and $12,000 of unsubsidized Stafford), or a total of $20,500 of unsubsidized Stafford loan.
The annual interest rate of the DL Stafford loan is fixed at 6.8%. Regulations mandate a charge of 1% origination fee and a conditional upfront rebate of 0.5% prior to disbursement on all Stafford loans. The aggregate Stafford loan limit on the DL subsidized is $65,500 and $73,000 for the DL unsubsidized, or a combination of $138,500 (include ALL unpaid Stafford loans). The standard repayment schedule is 10 years; though, longer repayment schedules are available. All Stafford loans are education loans that must be repaid.
This loan is a credit-based federal loan program extended to graduate/professional students. Annual eligibility for the Grad-PLUS loan is limited to the total cost of attendance minus the sum of all other financial aid awards. Likewise, there is a deduction of 4% origination fee and a conditional upfront rebate of 1.5% prior to disbursement on all Grad-PLUS loans. The interest rate is fixed at 7.9% and there is no grace period before repayment. This means repayment term begins 60 days after the loan is fully disbursed. However, the option in-school deferment will automatically be granted to all students/borrowers during enrollment periods.
In general, the credit requirements for Grad-PLUS loans are minimal. However, the credit criteria do not allow adverse credit upon approval. This means a student/borrower must not have any debt more than 90 days past due, default determination, unpaid collection accounts, unsatisfied judgments, or any evidence within the past five years of bankruptcy, default or discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Title IV student loan debt. There are no collateral requirements or income limitations on the Grad-PLUS loans.
The Budget Control Act of 2011 also terminates the repayment incentives and the reduction in the interest rate or origination fee to DL borrowers, effective for DL loans first disbursed on or after July 1, 2012. This means the up-front interest rebate (0.5% for the Stafford and 1.5% for the Grad-PLUS loan) will no longer be offered on any DL program. As a result, students/borrowers will pay the origination fee in full before disbursement – 1% for Stafford and 4% for Grad-PLUS loans.
Alternative or private loans are credit-based loans made available to students who are unable to finance their cost of education with the federal student loan programs. Alternative/private loans can be expensive due to the changeability of interests and fees applied on the loan amount. Depending on the student/borrower’s credit score and borrowing history, most lenders charge a quarterly variable interest rate plus a supplemental loan fee at repayment. Although these loans are not based on a student’s need, other financial resources are always considered when determining the eligible amount for the loan. No combination of any financial assistance may exceed the total cost of attendance for each academic year.
Bar examination loans are offered to graduate candidates only. These are credit-based loans made available through various lenders to cover expenses for living and bar review courses following graduation. Certain restrictions apply, including the processing time before and after graduation, loan limits, and other credit criteria. All disbursements for the Bar loan are sent directly to the borrower.
For the purpose of debt management, the Law School restricts the certification of the Bar examination loan. Graduates may have multiple lenders for their Bar loans; however, the total of the multiple loans may not exceed the highest loan amount offered in the market. Before applying for a Bar loan, graduates are encouraged to meet with a Financial Aid Counselor for advice on the terms and restrictions of the Bar loan.
Through the William C. and Selma B. Harris Memorial Fund, Whittier Law School is able to provide emergency short-term loans to needy students. Loans are made for up to $500, depending on the availability of funds, for a maximum 60-day term and bear no interest. Students must complete an application and a petition form for the loan when applying. The emergency loan funds are available within 24 hours after the loan application is fully approved by all required parties and has been received by the Business Office.
Repayment of the emergency loan must be made in the Business Office. The maximum repayment period is 60 days after the application date, but it cannot in any event exceed the student’s graduation date. In all cases, however, when the Business Office receives any other fund sources for a student who has the emergency loan outstanding, such funds will be applied first to the repayment of the loan.
Students must be currently enrolled at Whittier Law School to qualify for the Harris Memorial emergency loan fund. No emergency loans can be made before the first day of classes or after the last day of final exams for any enrollment period. Funds in the emergency loan account are limited and in the event the loan funds are depleted, no loan can be made until funds are available.
The loan certification process at the Law School is in accordance with the DOE standards. It is a goal of the Office of Financial Aid to ensure that students take advantage of all available federal loan benefits prior to obtaining an alternative/private loan. Thus, the federal DL Stafford and Grad-PLUS loans will automatically be awarded in a student’s financial aid packet. Those who want private/alternative loans and/or are not qualified for federal loans must first meet with a Financial Aid Counselor for advice on alternative/private loans.
By regulations, loan funds are disbursed in two payments for the period of fall and spring semesters. Typically, financial aid loan funds will occur within 10 days prior to the first day of the semester or the enrolled program. The Office of Financial Aid will notify students of the arrival of their loan proceeds. There is a need of three (3) business days for the posting of loan funds onto a student’s account at the Law School. All loan funds will then be handled by the Business Office (BO) for tuition payments and refunds of loan aid for cost of living (if applicable). Except for the process of determining eligibility and certifying loan funds, the Office of Financial Aid is prohibited to conduct any cash transaction on a student’s account. Therefore, students must contact the Business Office with any information or activities related to tuition due, fees charged, and/or refunds of their loan funds.
To make public interest law careers more financially feasible for Whittier Law graduates, the Whittier Law School Public Interest Law Foundation (WPILF) and the Law School administration established a Loan Repayment Assistance Program (LRAP) in 2002, with the first grants awarded in May 2003 and July 2003. The 2002 feasibility study indicated that LRAP was a necessary institutional commitment to support the work of the Center for Children’s Rights (CCR), the WPILF Summer Grant Program, the Externship Program, and a Whittier curriculum emphasizing the legal needs of the under-represented.
Each grant recipient will receive two checks, disbursed in April and October yearly. Each check will be made payable to both the graduate and the lender. At the discretion of the recipient, funds may be applied to either principal or interest. Continuing employment at the time of the application is required and verified prior to the second disbursement.
The College Cost Reduction and Access Act of 2007 (CCRAA) offers federal student loan borrowers with high debt relative to income an opportunity to choose lower monthly payments through a new repayment option entitled Income-Based Repayment (IBR). It also offers loan forgiveness after 10 years of public service employment.