If you haven’t accepted your financial aid loan yet, you have until Nov. 22 until it is cancelled.
But if you have accepted a loan, signed a promissory note, completed loan counseling and received a check, you are fine.
The Financial Aid Office is canceling unaccepted loans because a loan fee increase will take place Dec. 1, Director of Financial Aid Lois Kelly said. The cancellation deadline for the office is Nov. 22.
The office sent emails to more than 3,000 students notifying them of the cancellation, she said.
“We, right now, have thousands of students who have done nothing with their loans,” Kelly said.
Students who received the email fall into one of three situations. They could have been offered the loan but did nothing further. They also could have been offered the loan and accepted but didn’t sign the loan promissory note or do the loan entrance counseling and then have no money disbursed against their account. Lastly, they could have accepted the loan, resolved everything and have money disbursed against the account.
If you already received a check for your loan, the increased fee will not affect you. However, if you ask the office to reinstate the loan on your behalf after Dec 1., the higher fee will take effect.
The fee increase relates to the sequestration activities that went into effect on March 1 of this year as a way to help balance the budget, Kelly said. The automatic increase affects federal student and parent loans.
Kelly said the amount of the fee change is “modest.” The current Stafford loan fee is 1.051 percent, but will rise to 1.072 percent. The current Direct Parent PLUS loan fee is 4.204 percent but will rise to 4.288 percent.
This means a student borrowing $5,500 after Dec. 1 will have $1.16 less to use towards whatever they are borrowing the money for compared to those who borrowed that amount earlier, Kelly said.
The fee’s purpose is to offset the cost of processing the loan.
“The fee is not retained by Cal Poly,” Kelly said. “We receive no money for processing the loan, but that fee is retained by the U.S. Department of Education to help offset the overall processing cost.”
Kelly said the office has received numerous calls from students saying they don’t intend to use the loan they were offered. Also, the numbers of students borrowing money this year is very similar to last year, she said, leading the office to conclude cancellation is for the best.
“We determined that it was a wiser use of time and activity to just go ahead and cancel the loans and not re-offer them,” she said.
If students decide they want the money, Kelly said they do not have to reapply, as long as they haven’t changed their eligibility. They just have to let the office know, and the office will re-offer the loan.
Because a loan is incurring a personal debt, Kelly said students should consider their financial situations before deciding to take out a loan.
“This is not a huge loan fee increase, and so it’s more prudent that the student evaluate his or her financial situation before they just jump in and take a loan,” Kelly said.
To accept a loan offer, students should go to their My Cal Poly Portal and click on the “Money Matters” tab and click “Accept My Financial Aid.” If you have never taken a loan out before, sign the promissory note, which is valid for 10 years. Then go to studentloans.gov and complete the Entrance Counseling. It takes between 15 and 30 minutes to read through the loan requirements and loan responsibilities and answer a few questions to make sure you understood them, Kelly said. Then, typically within 48 and 72 hours, the loan funds and goes against their student account, she said.
The office pays a third of the loan in the fall, a third of it in the winter and a third of it in the spring. And if that’s all done before the cancellation date (Nov. 22), then the lesser loan fee will apply.
Financial counselors and advisers are available to answer questions via email at email@example.com, telephone or if students drop by, she said.