Fillable Master Promissory Note Template Direct Plus Loans (Page 8 of 15) in pdf

William D. Ford Federal Direct Loan Program

Direct PLUS Loan Borrower's Rights and Responsibilities Statement

Servicemembers Civil Relief Act

If you do not pay the

If you pay the interest

interest and it is

as it accrues...

If you are in military service, you may qualify for a lower interest rate on your

capitalized...

loans.

Loan Amount

$15,000

$1,575

Under the Servicemembers Civil Relief Act, the interest rate on loans you received

$1,575

Interest for 12 Months

(unpaid and

(paid as accrued)

before you began your military service may be limited to 6% during your military

capitalized)

service. In most cases, your servicer will determine if you are eligible for this benefit

$15,000

$16,575

Principal to be Repaid

based on information from the U.S. Department of Defense, and, if any of your

Monthly Payment

$202

$224

qualifying loans have an interest rate greater than 6%, will automatically reduce

Number of Payments

120

that rate to 6% during your military service. If you think you qualify for the 6%

Total Repaid

$25,863

$26,839

interest rate but have not received it, contact your servicer. Your servicer can also

The example in the chart above shows payments made under the Standard

provide more information about this benefit.

Repayment Plan at an interest rate of 10.5%, the maximum interest rate for a Direct

If you have an adverse credit history and receive a Direct PLUS Loan by obtaining

PLUS Loan. In this example, you would pay $22 less per month and $975 less

an endorser, you will also qualify for the 6% interest rate limit on that Direct PLUS

altogether if you pay the interest as it is charged during a 12-month deferment or

Loan if the endorser qualifies for the limit based on the endorser's military service

forbearance period.

(see the Note to Endorser below).

Federal income tax deduction

NOTE TO ENDORSER

You may be able to claim a federal income tax deduction for interest payments you

You may be eligible for the reduced interest rate described above based on the

make on Direct Loans. For further information, refer to IRS Publication 970, which is

borrower's military service or your own military service if you are the endorser for a

available at

Direct PLUS Loan for which you signed an Endorser Addendum prior to the earlier

11. LOAN FEE

of the beginning date of the borrower's military service or the beginning date of

your military service.

For each Direct PLUS Loan you receive under this MPN, we charge a loan fee that is

a percentage of the principal amount of each loan. This fee will be subtracted

proportionally from each disbursement of your loan and will be shown on a

10. PAYMENT OF INTEREST

disclosure statement that we send to you.

Except as provided below for borrowers who serve in the military, and (for Direct

12. INTEREST RATE REDUCTION FOR AUTOMATIC WITHDRAWAL OF

PLUS Loans made to graduate or professional degree students) during certain

PAYMENTS

periods of repayment under the REPAYE Plan, you are responsible for paying the

Under the automatic withdrawal option, your bank automatically deducts your

interest that accrues on each Direct PLUS Loan you receive from the date the loan

monthly loan payment from your checking or savings account and sends it to us.

is first disbursed until it is repaid in full, including during periods of deferment or

Automatic withdrawal helps to ensure that your payments are made on time. In

forbearance.

addition, you receive a 0.25% interest rate reduction while you repay under the

No accrual of interest benefit for active duty service members

automatic withdrawal option. Your servicer will provide you with information

Under the no accrual of interest benefit for active duty service members, you are

about the automatic withdrawal option. You can also get the information on your

not required to pay the interest that accrues on any type of Direct Loan Program

servicer's web site, or by calling your servicer. Your servicer's web site address and

loan first disbursed on or after October 1, 2008 during periods of qualifying active

toll-free telephone number are provided on all correspondence that your servicer

duty military service (for up to 60 months).

sends you.

Interest capitalization

13. DISBURSEMENT (HOW YOUR LOAN MONEY WILL BE PAID OUT)

If you do not pay the interest as it accrues on a Direct PLUS Loan, as described

Generally, the school will disburse (pay out) your loan money in more than one

above, we will add the accrued interest to the unpaid principal balance of your

installment, usually at the beginning of each academic term (for example, at the

loan. This is called “capitalization.” Capitalization increases the unpaid principal

beginning of each semester or quarter). If the school does not use academic terms

balance of your loan, and interest then accrues on the increased principal balance.

or does not have academic terms that meet certain requirements, it will generally

We capitalize unpaid interest when you resume repayment after periods of

disburse your loan in at least two installments, one at the beginning of the period

deferment or forbearance. We may also capitalize unpaid interest that has accrued

of study for which you are receiving the loan, and one at the midpoint of that

since the first disbursement of your loan when you enter repayment for the first

period of study. The school determines the schedule for disbursing your loan

time.

money in accordance with the Act.

The chart that follows shows the difference in the total amount you would repay

The school may disburse some or all of your loan money by crediting it to your

on a $15,000 Direct PLUS Loan if you pay the interest as it is charged during a 12-

account at the school (if you are a graduate or professional student borrower) or to

month deferment or forbearance period, compared to the amount you would

the student's account at the school (if you are a parent borrower), or may give it to

repay if you do not pay the interest and it is capitalized.

you directly by check or other means. Your servicer will notify you in writing each

time the school disburses part of your loan money.

Page 8 of 15

Master Promissory Note Template Direct Plus Loans Page 8

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