New Loan Program for Penn Students

The Trustees have agreed to a very exciting new loan plan for at least half-time graduate and professional students attending the University. When combined with Penn's Keystone Direct Rewards Federal Stafford Loan, the "package" is likely the best loan program in the country. With the cost of attendance an important consideration when selecting a school, the new program should come as a welcome relief from the more expensive plans on the market.

Penn's new loan plan will carry an interest rate of the 91-day U.S. Treasury bill plus 2.75%. It will have an origination fee of only 5% and have no fees when the student enters repayment. Depending on the amount borrowed, it will have repayment terms as long as 20 years. Most important, since the loan will be guaranteed by the University, Penn students will be approved for this loan up to the amount of the annual cost of attendance less federal loan eligibility and other financial aid, unless there is some serious previous negative credit history or the student's level of accumulated debt is unreasonable.

The Office of Student Financial Services will manage reserves developed from the program itself which should be sufficient to offset losses. Therefore, schools will not be expected to absorb any losses as in previous programs.

The design of the program will minimize the administrative hassles students experience when borrowing. Loan notes and disclosure statements will be prepared on campus. This will shorten the time between application and disbursement.

For undergraduates, we are also implementing a new supplemental loan plan with the same interest rate but with no origination fee. Borrowing under this program will be limited to amounts approved in the student's financial aid package.

Since 1984 when the Penn Plan was offered as the nation's first comprehensive educational financing plan, Penn has been a leader in helping students and their families cope with the cost of attendance. Together with the outstanding parental loan programs still part of the Penn Plan, the new loan plans will set a new standard and be a benefit to students and the schools. Both plans will be available for the 97-98 academic year.

-- Frank Claus, Associate VP, Finance


For Graduate and Professional Students: New Loan Plan Comparison

Penn Guaranteed Loan Program Access Loan Program (Competitive Program)
ELIGIBILITY A Graduate/Professional student enrolled at least half-time in a degree program

No negative credit

PGL aggregate limit set according to University division

A Graduate/Professional student enrolled at least half-time in a degree program

Must Meet ACCESS program criteria

Aggregate debt cannot exceed 120,000

May borrow with a credit worthy cosigner to reduce origination fee

ANNUAL LIMIT Cost of education less other aid Same
INTEREST RATE
91 Day TBill + 2.75%

Interest capitalized at repayment

91 Day TBill + 3.25% up to repayment
91 Day TBill + 3.40% during repayment

Interest capitalized at repayment

ORIGINATION FEE 5% 7% Student borrower without cosigner

6% Student borrower with cosigner

FEE AT REPAYMENT 0% 3%
REPAYMENT TERMS 6 month grace period; up to 20 years to repay 9 month grace period; up to 20 years to repay


For Graduate and Professional Students: Stafford Loan Comparison

Penn Stafford Loan Program Federal Stafford Loan Program Eligibility
ELIGIBILITY A Graduate/Professional student enrolled at least half-time in a degree program making satisfactory academic progress Same
ANNUAL LIMIT Up to $18,500 per year with a maximum subsidized loan of $8,500 per year

Aggregate limit is $127,650 including undergraduate borrowing

Same
INTEREST RATE 91 day TBill + 3.1% with 8.25% cap

91 day TBill + 2.5% on unsubsidized loans during in-school, grace and deferment periods

Same
FEES Subsidized:
2% origination fee
.75% insurance fee

Unsubidized:
3% origination fee
0% insurance fee

3% origination up to 1% insurance
up to 1% insurance fee

3% origination up to 1% insurance
up to 1% insurance fee

REPAYMENT TERMS 6 month grace period

up to 10 years to repay

$50 minimum monthly payment

2% interest rate reduction after 48 consecutive on time payments

.25% interest rate reduction for ACH Payments

Same

Same

Same

Not available from all lenders

Not available from all lenders


For Undergraduate Students: Stafford Loan Comparison

PHEAA Keystone Direct rewards Stafford Program Federal Stafford Loan Program
ELIGIBILITY An undergraduate student enrolled at least half-time in a degree program making satisfactory academic progress Same
ANNUAL LIMIT From $2,625 - $5,500 in subsidized loan eligibility based on financial need and grade level

Students ineligible for subsidized funds may received unsubsidized loan up to the grade level maximum

Same

Same

INTEREST RATE 91 day TBill + 3.1 % with 8.25% cap

91 day TBill + 2.5% on unsubsidized loans during in-school, grace and deferment periods

Same
FEES Subsidized:
2% origination fee
1% insurance fee

Unsubsidized:
3% origination fee
0% insurance fee

3% origination fee
1% insurance fee

3% origination fee
1% insurance fee

REPAYMENT TERMS 6 month grace period

up to 10 years to repay

$50 minimum monthly

2% interest rate reduction after 48 consecutive on time payments

.25% interest rate reduction for ACH payments

Same

Same

Same

Not available from all lenders

Not available from all lenders


Almanac

Volume 43 Number 17
January 14, 1997


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