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Frequently Asked Questions about Changes in Federal Loans at MSU

WHAT DO I NEED TO DO?

For fall 2008:

  • Everybody who wishes to borrow for fall 2008 must complete a new Master Promissory Note (MPN). The Direct Loan MPN for Stafford, Parent PLUS, and GradPLUS can be found at dlenote.ed.gov.
  • PARENTS: If you wish to borrow a Parent PLUS Loan you must complete a PLUS Loan Application Form (LAF) in addition to the MPN.
  • STUDENTS: You must accept your loan(s) in StuInfo/eFinaid in addition to completing the MPN.

For summer 2008:

  • Graduate students borrowing Stafford Loans with MSU as lender need to select a new lender and complete an MPN at www.fastproducts.org/mpn/msugrad. You cannot use the Direct Loan Promissory Note you complete for fall sumester for summer 2008.
  • Undergraduate Stafford borrowers, Parent PLUS and GradPLUS borrowers DO NOT NEED TO DO ANYTHING. If you want to check lender information you may go to the appropriate link below to decide whether or not to change lenders. Remember that the maximum interest rate and 6 month grace period are set by law, but not all lenders offer the same additional benefits.
What are the changes I need to know about?

The Michigan Higher Education Student Loan Authority (MHESLA) program that has purchased loans made to MSU students since 2003 has suspended operation. When MHESLA purchased MSU loans, it provided a rebate of the borrower fees and a waiver of the interest after 36 on-time payments. With the suspension of this program, borrowers will receive discount benefits only if these are offered by their lender. The specific discounts, if any, will be disclosed to you by your selected lender.

Loans already purchased by MHESLA will continue to carry the original benefits.

Because of the continuing uncertainty in the federal loan programs, MSU has made the decision to switch to the Federal Direct Student Loan Program beginning Fall 2008.  Under Direct Lending, the US Treasury serves as the lender. More information about Direct Loans is available on the MSU Office of Financial Aid website (www.finaid.msu.edu) and at the US Department of Education’s website (www.ed.gov/DirectLoan).

What loans are affected?
When applying for a Stafford Loan, PLUS, or Grad PLUS in the past you chose your own lender. Many MSU students chose Comerica or Chase, and graduate students may have chosen MSU as a lender. Most Stafford Loans were purchased at a later date from Comerica, Chase, or MSU by MHESLA. MHESLA offers the Michigan Students First (MSF) Benefit. Any loans that you currently have that have already been purchased by MHESLA continue to qualify for Michigan Students First Benefits. MHESLA has stopped purchasing Stafford Loans, which means your loans will stay with Chase or Comerica or any other lender you may have had previously and they will not qualify for the Michigan Students First Program.
How do I find out which lender I have?
The majority of federal loans processed at MSU since 2003 have been through Great Lakes Higher Education Corporation (GLHEC) as guarantor. Information regarding loans processed through Great Lakes, including specific lender information, is available at www.mygreatlakes.org. Select Borrowers, My Loans, Internet Borrower Inquiry Service (IBIS)
How do I know if my loan has been sold to MHESLA?
IBIS (see above) should include this information.
How do I choose a new lender or see what benefits they currently offer?
How do I contact the lender?
  • Comerica: 1-800-345-6232
  • Chase: 1-800-487-4404
Will this delay my summer refund?
If you have accepted your loans and have completed an online MPN by April 30th,  there should not be any delay.
Will I have to pay more for my federal loan with a new lender?
The MHESLA program appeared to have the cheapest borrowing cost of any program in the country.  It is likely that you will pay more to borrow now. However the maximum interest rate, borrowing fees, and other repayment terms and conditions of federal loans are established by Congress and no lender can charge you more than these established maximums.
What lender should I use for my federal loan for the summer semester?
Nobody can tell you which lender is the best one for you to use. There are hundreds of lenders that participate in the federal loan programs and you may select any that offers terms and conditions that you find reasonable. Several lenders offer MSU students competitive fees and interest rates and have committed to providing efficient service to both the borrower and the MSU; these are listed at www.finaid.msu.edu/loanchanges.asp.  We suggest you compare their rates, benefits, and services to make the decision that you feel is best.
 Are there negative aspects of using multiple lenders?
Borrowers who use multiple lenders may need to make multiple monthly payments after they graduate. If all of your lenders use the same loan servicing company, you can receive a single monthly statement regardless of the number of lenders.  If your lenders do not use the same loan servicing company, you can consolidate your loans into a single loan to avoid the inconvenience of multiple monthly payments. Loan consolidation is considered a federal loan program and the fees and interest rate you can be charged are strictly regulated.

More about changes in federal loans at MSU …

 

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