Funds Available for Medical Students to

Loans

William D. Ford Federal Direct Loan Program (Subsidized and Unsubsidized Loans)
Under the William D. Ford Direct Loan Program, the Department of Education makes loans to students to pay the cost of attendance at post secondary schools. Mercer University receives loan funds directly from the U. S. Department of Education and disburses them to eligible students.

There are two kinds of direct loans available to MUSM students:

Direct Subsidized Loan - The federal government pays the interest on the loans while the student is in school and during specified deferments. Students must demonstrate financial need to receive a Direct Subsidized Loan.

Direct Unsubsidized Loan - These loans are available to students regardless of financial need; however, the borrower is responsible for the interest that accrues during any period.

To apply for a Direct Loan, a student must complete and submit a Free Application for Federal Student Aid (FAFSA) or Renewal Application for Federal Student Aid (RAFSA). The Department of Education uses the information provided on the FAFSA/RAFSA to determine the student's expected family contribution (EFC), the amount the student can be expected to contribute toward college costs. The school uses the EFC to determine the total amount of financial aid the student needs, including the amount of Direct Subsidized Loan (need-based) funds the student is eligible to receive.

The interest rate for Direct Subsidized Loans and Direct Unsubsidized Loans is variable. The interest rate during any twelve-month period beginning on July 1 and ending June 30 is determined on June 1 immediately preceding that period. The interest rate is equal to the bond equivalent rate of 90-day Treasury Bills auctioned at the final auction held prior to that June 1 plus 2.3 percentage points during repayment or plus 1.7 percentage points prior to repayment for loans which accrue interest prior to repayment. Interest is capitalized (added to the borrower's unpaid principal balance) at repayment. The maximum interest rate for Direct Subsidized and Direct Unsubsidized Loans is 8.25%. Direct Loans have an origination fee of 3% of the total amount of the loan, and a portion of that total fee is deducted from each disbursement.

In no case may a Direct Subsidized or Direct Unsubsidized loan amount exceed the student's estimated cost of attendance for the period of enrollment for which the loan is intended, less the student's estimated financial assistance for that period and, in the case of a Direct Subsidized Loan, the borrower's expected family contribution for that period.

The annual loan limit for a Direct Subsidized Loan is $8,500 and the aggregate unpaid principal amount, including subsidized loan amounts borrowed under the Federal Stafford Loan Program, may not exceed $65,500, including loans for undergraduate study. The annual loan limit for a Direct Unsubsidized Loan is $18,500 less the amount of any Direct Subsidized Loan, and the total aggregate amount of Direct Unsubsidized Loans may not exceed $189,125, including any loans for undergraduate study, minus any Direct Subsidized Loans, subsidized or unsubsidized loan amounts borrowed under the Federal Stafford Loan Program and the Federal SLS Program loan amounts.

Repayment of Direct Loans begins six months after graduation or at least half-time enrollment is terminated. The borrower may choose from four different repayment plans. Prior to entering repayment, borrowers will be given information on all the repayment plans available under the Direct Loan Program.

A Direct Loan borrower who has no outstanding balance on any FFEL Program loan made prior to July 1, 1993 is eligible to defer repayment of Direct Loans during any period in which the borrower meets any of the following requirements:

• The borrower is attending school at least half-time, is pursuing a course of study pursuant to a graduate fellowship, or is pursuing a rehabilitation training program for individuals with disabilities;
• The borrower is seeking and unable to find full-time employment (up to three years); or
• The borrower has experienced or will experience an economic hardship (up to three years).

If, at the time of application for a Direct Loan, a borrower has an outstanding balance on any FFEL Program loan that was made prior to July 1, 1993, the borrower is eligible for the above described deferments and some additional deferments available under the FFEL Program which may include a two-year deferment during residency training.

When Direct Loans enter the repayment period, a borrower who intends to repay the loan but who has circumstances which make repayment difficult for a period of time may be granted a forbearance in the form of temporary cessation of payments, an extension of time for making payments, or the servicer may temporarily accept smaller payments. With sufficient support documentation, borrowers will be granted forbearance while in a medical internship or residency that must be successfully completed before the borrower may begin professional practice, or while serving a medical internship or residency program leading to a degree or certificate award by an institution of higher education, hospital, or health care facility that offers postgraduate training. Interest accrues during forbearance and, if not paid, is capitalized.

Direct loans are originated electronically and the funds are transferred electronically which gives us the advantage of fast, accurate processing.

Students requesting funds from MUSM must borrow the maximum amount for which they are eligible from the Direct Subsidized Loan Program before they will be considered for any institutional funds.

Alternative Loan Programs 
Alternative Loan Programs are non-need-based loan programs designed to help with the costs of allopathic medical education that cannot be paid through other means. These programs are sponsored by a variety of lenders. A list of some available alternative loans follows.  MedLoans available through Association of American Medical Colleges and Bank One and Medical Access available through the Access Group, etc.

The total amount available per year is the cost of education (the standard student budget) less all federal need-based and non-need-based loans and any other school or outside awarded financial assistance (loans and scholarships). The amount borrowed for one academic year may not exceed the approved school budget. A student is eligible to borrow from this program until his or her aggregate unpaid educational loan limit from all sources reaches the limit specified by the alternative lender.

Interest on alternative loans begins to accrue immediately. The interest rate is variable and adjusted quarterly to the bond equivalent of the 91-day U.S. Treasury Bill rate plus a variable percentage set by the alternative program lender. Interest, deferment, and forbearance options may be quoted by each individual program.

Borrowers are charged a guaranty fee at disbursement. The guaranty fee is a percentage of the total amount of the loan. A portion of the total fee will be deducted from each loan check.

Repayment begins three to four years after medical school graduation depending on the length of residency training, or after nine months if the borrower's student status changes to less than half time prior to medical school graduation. There is no penalty for prepayment. Borrowers have a maximum of twenty years to repay.

These loans may be processed electronically by MUSM and the funds received by Electronic Funds Transfer.

MUSM Student Loan Funds 
Students are awarded loan funds based on financial need. Students must provide parental data on the Free Application for Federal Student Aid and submit a signed copy of their parents' income tax return to be eligible for most MUSM-administered loans. The interest rates of school loans range from 5% to 8.25%, and no interest is charged until repayment begins. Grace periods vary according to loan type. Both principal and interest payments may be deferred for residency upon completion of the appropriate deferment forms. Repayment periods are from five to ten years, depending upon the type of loan.

Primary Care Loan Funds (Department of Health and Human Services Title VII)
The Primary Care Loan (PCL) program is a low cost federal loan program for medical students committed to primary health care practice. The interest rate is 5 percent and begins to accrue following a one-year grace period after you cease to be a full-time student. When compared to other federal student loans and private loans, the PCL provides significant savings. The loan also offers deferment of principal and interest not found in other loan programs. There is a service obligation associated with the primary care loan.

• You must enter a residency training program in family medicine, internal medicine, pediatrics, combined medicine/pediatrics, preventive medicine, or osteopathic general practice.
• You must complete your residency program within four years of graduation.
• You must practice in primary health care until the loan is paid in full.

To assist schools in allocating limited PCL funds, Health and Human Services requires parental financial information from all students to determine financial need without regard to age, tax, marital, or independent status.