March 14, 2008
Financial aid director: no loan shortfall for UI students
Recent news reports have described how the credit crisis is making educational loans more expensive and harder to find, but University of Iowa officials want to assure students and their families that there will not be a shortage of financial aid for UI students in the upcoming school year.
The issues with student loans have occurred with private lenders, but the UI has for 12 years participated in the Federal Direct Loan Program, meaning UI students and their parents can take out low-interest educational loans directly through the federal government.
These Federal Direct Loans will remain available to all students who apply for financial aid by completing a Free Application for Federal Student Aid (FAFSA). Parents of undergraduate dependent students will still be able to take out a Federal Direct PLUS Loan to cover remaining costs of their child's education.
"We're concerned that families are walking away from these news reports thinking there are no educational loans available," said Mark Warner, assistant provost of enrollment services and director of student financial aid at the UI. "We want families of current and prospective UI students to know that there is no shortfall of federal student loans."
Through the federal program, undergraduate students can borrow up to $3,500 their freshman year, $4,500 their sophomore year, and $5,500 each year for their junior and senior years. All students who complete the FAFSA qualify, but those with less financial need may have to pay interest while in school.
If grants, scholarships, work-study funding, or a student's federal loan don't cover the cost of education -- which includes tuition and fees, room and board, books, personal expenses and transportation -- parents of undergraduate dependent students can take out a Federal Direct PLUS Loan to cover the rest, Warner said. Graduate and professional students have the option of borrowing up to $20,500 per year through Federal Direct Loans and up to the full cost of education though federal Graduate PLUS Loans.
Warner acknowledges that there are cases in which parents are unwilling to take out loans on behalf of students, in which students want to be financially independent, or in which families opt not to complete the FAFSA. He said there will continue to be alternative loans available through private lending sources, although he advises students and parents to exhaust all federal loan options before turning to private sources.
"We have always strongly encouraged families to file the Free Application for Federal Student Aid, and to take advantage of the Federal Direct Loans for both students and parents," Warner said. "We will continue to urge them to do so in light of these issues with the availability of private educational loans."
For information on the federal loan programs, visit http://www.uiowa.edu/financial-aid/loans
STORY SOURCE: University of Iowa News Services, 300 Plaza Centre One, Suite 371, Iowa City, Iowa 52242-2500