Summer 2008
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2008-2009, 2007-2008
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Minnesota State University,
Mankato School Code:
002360
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The Student Educational Loan Fund (SELF) was established to help students pay for their education beyond high school. The SELF program is administered by the Minnesota Office of Higher Education. The program is intended to help students who have limited access to other financial aid programs.
IMPORTANT: The SELF Loan complies with both Satisfactory Academic Progress (SAPS) criteria as well as the Family Education Rights and Privacy Act (FERPA).
This program is part of Minnesota's overall financial aid policy which provides grant assistance to students from families with limited financial resources but also expects students to contribute toward their education through savings, work or borrowing.
Potential borrowers should consider the advantages and disadvantages of both the SELF and Unsubsidized Stafford Programs. SELF is attractive because it has a lower interest rate and requires no prepaid fees. However, in contrast to the federal program, it requires a co-signer and cannot be consolidated.
Also, there is no cap on the interest rate on the SELF Loan, however the interest rate will never vary more than 3% in any 12-month period. The SELF Loan cannot be consolidated with a Stafford Loan resulting in two different loan payments for students with Stafford and SELF loans.
Before applying for SELF, students are required to seek other sources of federal, state, institutional, and private aid for which they may be eligible. To fulfill this requirement, students must complete the FAFSA prior to apply for a SELF Loan.
The loan can be used only for educational purposes, and must be repaid.
All borrowers must have a credit worthy co-signer who is either a U.S. citizen or a permanent resident, and who resides in the U.S. The co-signer is responsible for making loan payments (interest, principal, and other charges) if the borrower fails to make payments promptly or in full. The co-signer is relieved of this responsibility only in the event of death or total and permanent disability of the borrower.
A credit worthy co-signer is one who, in the Minnesota Office of Higher Education judgment, has no credit balances discharged through bankruptcy, no garnishments, attachments, foreclosure, repossession, or suits; no delinquent or unsatisfied credit obligations such as tax or mechanic liens, or judgments; or no more than 5 percent of current credit bureau balances past due.
If the co-signer has no credit history, credit worthiness will be determined by the Minnesota Office of Higher Education through a review of banking references and a review of net worth with a minimum test requiring that net worth equal or exceed a sum 10 times the size of each loan amount requested.
Before applying for a SELF loan, a student is to have applied for and exhausted all eligibility for other forms of financial aid except for educational loans and work-study. This is called the "maximum effort" test.
The maximum loan amount is $7,500 for each undergraduate grade level, and $9,000 for each graduate grade level provided that the loan amount shall not exceed the cost of attendance less all other financial aid, including other educational loans, and the cumulative SELF loan debt shall not exceed the following grade level limits:
Grade Level indicates the relative status of an eligible student in a degree or certificate granting program and usually corresponds to an academic year. Grade Level does NOT necessarily correspond to the total number of years a student has been in post-secondary education. Grade level (year in school) is determined by the total number of credits earned. An eligible student in the second year of a four-year program, for example, would be in Grade Level 2, even though he may have been in school for three total years.
A student may borrow more than once during an academic year as long as eligibility remains, the request is for at least $500 (the minimum loan amount), and adequate time remains to process the application.
Graduate Student: The maximum loan amount is $9,000 per grade level provided that: The loan amount shall not exceed the cost of attendance less all other financial aid, including all other educational loans.
Loan proceeds will be delivered electronically. Those funds will be applied to your student account. Funds are disbursed by academic term.
The borrower must pay interest and principal on the loan. There are no guarantee, origination or processing fees charged.
Interest Rate to the Borrower: The interest charged to the borrower will vary throughout the life of the loan. There is no cap on the interest rate, but the interest rate will not vary by more than 3% in any 12-month period. The borrower will pay an interest rate which is based on the London Interbank Offered Rate (LIBOR) plus a margin of currently 2.7%. Information about how the interest rate is calculated, and your actual interest rate is available from the Minnesota Office of Higher Education.
Guarantee Fee: Since July 1, 1989, there has been no guarantee fee charged.
Borrowers must repay their loans as follows:
Payment of Interest: The borrower must pay interest quarterly while in school. This is called the "in-school period." Interest payments will start approximately 90 days from the disbursement of the loan. During the first 12 months after graduation or if enrollment drops below half-time, the borrower will be converted to a monthly interest payment schedule. This 12-month period is called the "transition period."
Repayment of Principal and Interest: The period in which monthly principal and interest are paid is called the "repayment period". Near the end of the 12 month transition period, the borrower can choose between two repayment plans: the Standard Plan, and the Extended Interest Plan. The Standard Plan requires the monthly payment of principal and interest starting on the 13th month after graduation or when enrollment drops below half-time. The Extended Interest Plan provides two additional years of monthly interest only payments. Monthly payment of principal and interest with this Plan begins on the 24th month after graduation or termination of study. While the Extended Interest Plan extends the transition period, it shortens the repayment period by the same amount of time.
(Note: A borrower may move back and forth between the In-School and Transition phases, but once a Transition phase has been exhausted and the Repayment phase entered, the borrower may NOT leave the Repayment phase. There are no deferment categories in the SELF program.)
The maximum loan repayment period is 10 years from the time the student graduates, or enrollment drops below half time, or 15 years from the date of the first loan disbursement, whichever is less. A shorter repayment period may be arranged. The total amount borrowed will determine the borrower's minimum monthly payment. However, the minimum monthly payment is $50.00.
All of a borrower's SELF loan payments may be combined into a single loan when he or she begins the repayment period, assuming the same co-signer is used on all loans.
SELF loans that have different co-signers CANNOT be combined for repayment, regardless of the program phase they're in.
Borrowers are encouraged to repay as quickly as possible. There is no penalty for prepaying SELF loans.
A charge, not to exceed $20, will be assessed against borrowers whose payments on principal and interest are received by the Minnesota Office of Higher Education more than 15 days after the regularly scheduled due date. Under some special conditions, the Minnesota Office of Higher Education may grant delays in repayments or accept smaller payments than scheduled. This is called "forbearance."
Upon request, the Minnesota Office of Higher Education will provide borrowers and co-signers with an annual statement of principal and/or interest paid during the previous calendar year.
Transferring Schools: If a borrower transfers schools or continues for a higher degree at another institution, he/she must be sure:
SELF Loan Repayment Examples: The interest rate on SELF loans may change every calendar quarter. The interest rate equals 2.7 percent added to the average three-month LIBOR (London Interbank Offered Rate). Since October, 1988, the interest rate has varied from 4.5 percent to 10.5 percent.
During that time, the interest rate has averaged 7.22 percent.
The interest rate will continue to vary throughout the life of the loan. The interest rates may increase or decrease.
If the borrower or co-signer is delinquent in payment beyond 120 days or has failed to meet any of the other conditions of the loan, the loan will default. If a loan should be in default, the program or its insurers will then take one or more of the following actions:
Borrowers cannot have their loan obligations discharged through bankruptcy for seven years after leaving school. Federal bankruptcy laws exclude from discharge, loans made by a state agency, except in hardship circumstances.
Security for the program against the risks of death, default, and disability is provided solely by the Minnesota Office of Higher Education.
Each program has advantages and disadvantages. The student and family should learn the facts about each program, and decide which program can best help them.
The Unsubsidized Stafford is a federal loan. The student borrower has a choice of either paying the interest on the loan while in school, or adding it to the loan principal for payment later. It has deferment categories plus forbearance options. The interest rate varies annually throughout the life of the loan. The Unsubsidized Stafford Loan can be included in federal loan consolidation programs, and can be included in the U.S. Army loan repayment program. The Unsubsidized Stafford requires the payment of a guarantee fee and a loan origination fee.
SELF is a state loan made only by the Minnesota Office of Higher Education. The student borrower must pay the interest while in school. SELF has no deferment categories, and there is a limited forbearance option. The interest rate varies quarterly, throughout the life of the loan. SELF requires a credit-worthy co-signer. SELF loans themselves cannot be included in a Federal Consolidation Loan. SELF loans cannot be included in the U.S. Army loan repayment program. There are no application, guarantee, or origination fees required in the SELF program.
Following are the main steps involved in obtaining a SELF loan:
For questions about SELF loans that have already been made should be directed to:
Firstmark Services
PO Box 25410
Woodbury, MN 55125-0410
(888)538-7378
