A trending topic at Palomar is about financial aid and specifically student loans.
According to school officials, there is a loan program that is at a 30 percent default as a result of students not paying their loans back. The loans that are not paid back make it difficult for the program to continue and officials are considering shutting it down. This was brought up by Diana Studinka at a Faculty Senate meeting on Jan. 26.
Students don’t always pay back their loans on time or in some cases at all. Defaulting on student loans has consequences to the student as well as the program.
There are two type of William D. Ford Federal Direct loans offered at Palomar. Subsidized loans are interest free while in school as long as the student is enrolled at least part time. Unsubsidized loans are not interest free and the student is charged interest while attending school. The amount borrowed is dependent upon how many credits the student has completed and whether or not they meet eligibility.
Students who have 24 units or less, a total of $12,500 or more in loan debt, or have been approved for financial aid through an appeal will not be eligible to borrow unsubsidized loans at Palomar College for the 2014-2015 year.
According to the Palomar website, the interest rate for Direct Loans disbursed after July 1, 2014 is 4.66 percent. There is also an origination fee on all Direct Loans, whether subsidized or unsubsidized. The fee is a percentage of the loan amount that is deducted from each loan disbursement. The current fee percentage is 1.073 percent for loans disbursed on or after Oct. 1, 2014.
The total limit for a dependent undergraduate student is $31,000 and $57,500 for an independent undergraduate student.
Although the financial aid is through Palomar College, the loan is actually billed through a loan servicer. In extenuating circumstances the services can grant temporary postponement or reduction of monthly payments.
Credit Bureaus receive information about all loan information regarding late or non payment which lowers credit scores. Defaulting on loans also puts a student at risk for losing eligibil- ity for future financial aid.
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