Education Loans Frequently Asked Questions
Why can't I borrow more than the cost of tuition?
The Act Education Loan allows you to borrower education related expenses up to the cost of education with an annual maximum of $45,000.
What proof of enrollment do I need to provide?
Proof of enrollment includes one of the following: a tuition bill, award letter or recent transcript that is no more than 90 days old from the school the loan is for. Documents must include the student's name, enrollment period, and name of the school. Enrollment period must include the enrollment period you provided on the loan request.
What are the different repayment options?
You have three options including deferment or repayment of interest only or interest and principle.
Full Deferral: No principal or interest payments due while enrolled in school (up to four consecutive years). Payment of principal and interest will begin 6 months either after graduation or if no longer enrolled at least half time. Interest will continue to accrue during the deferment period and will be capitalized (added to the loan balance) at the time of repayment.
Interest Only: Pay only accrued interest while enrolled in school (up to four consecutive years). Payment of principal and interest will begin either 45 days after graduation or withdrawal from school.
Immediate Repayment: Payment of principal and interest will begin 45 days after loan is disbursed.
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Are the funds from the loan sent directly to me?
Yes, a check will be sent directly to you at your mailing address. Keep in mind, if you have a cosigner, the check will be made co-payable to both of you.
How soon will I receive my funds?
Once you receive conditional approval, you will complete a promissory note and be required to submit documentation to verify the information on your application. If you return the requested documents quickly, you will receive your money soon afterward — it typically takes about 14 days but it can take as little as five business days after your conditional approval.
What is my interest rate?
The Interest rate is a combination of the One-Month LIBOR, plus a Margin. The rate ranges from the One-Month LIBOR + 2.5% to One-Month LIBOR + 8%. The rate will fluctuate as the One-Month LIBOR index changes. Applying with a credit worthy qualified cosigner may help you qualify for a lower rate.
What is the LIBOR?LIBOR is an interest rate index used to determine the interest rate at which banks borrow funds from each other in the London Interbank market. It stands for the London Interbank Offered Rate. The Act Education product uses the current one-month LIBOR which can be found in the "Money Rates" section of The Wall Street Journal (Eastern Edition).
Can I defer my payments while I'm in school?
Yes, you can defer your payments for up to 60 months as an undergrad student and 36 months as a grad student, as long as you are a half time student.
How is the interest rate calculated for the Act Education Loan?
The variable interest rate is calculated by adding the current one-month LIBOR index (which is rounded up to the nearest 1/8th of 1%) to a margin.
Are there fees associated with the Act Education Loan?
There are no upfront or origination fees for the Act Education Loan. However, there may be a repayment finance charge depending on your, or your cosigner's, credit history. Applying with a qualified cosigner may reduce your fee.
Click Here to Apply for the Act Education Loan
What are the repayment finance charge?
If a repayment finance charge is applicable to your loan, the charge will range from 2% to 5.5% and will be assessed at the time of repayment.
How much can I borrow with the Act Education Loan limits?
The loan offers an annual maximum of $45,000 or your school's cost of attendance, whichever is less. If the cost of attendance is more than $45,000, the max loan amount is $45,000. This limit does not include any Federal loans you may also have. The maximum undergrads can borrow is $75,000 and graduate students is $150,000.
The following rules apply for the loan amount: Please note: residents of the following states must meet a minimum loan amount: SC = $3,100, CO = $3,001, OK = $4,101, Alaska = $5,001, RI = $5,001.
Is there a grace period?
Yes. If you choose full deferment, payments do not have to start on the Act Education Loan until six months after graduation or dropping below half-time status.
Is there a minimum monthly payment?
Yes. Once principle and interest payments begin, the minimum monthly payment is $50.
What expenses can the Act Education Loan cover?
The Act Education Loan can be used to cover education-related expenses including tuition, fees, books, living expenses, a new computer, etc.
Do I have to be enrolled at least half-time to receive the Act Education Loan?
Yes. Borrowers must be enrolled at least half-time in an eligible and participating school in order to receive the Act Education Loan.
Does the Act Education Loan offer any discounts?
Yes! Each Act Education Loan is eligible for a $300 principal reduction upon graduation (proof of graduation is required). In addition, the interest rate can be reduced by 0.25% if the payments are automatically deducted from a personal bank account.
Click Here to Apply for the Act Education Loan
Do you offer cosigner release?
Yes. If the initial 48 consecutive payments are made on time, the borrower can apply to have the cosigner released from the loan. The borrower must meet credit guidelines at that time.
Is the interest tax-deductible?
Interest on student loans may be tax deductible. Please consult your tax advisor or visit irs.gov for more information.
How long are repayment terms for the Act Education Loan?
The standard repayment term is 25 years subject to a $50 minimum monthly repayment amount.
What are the benefits of the Act Education loan?
- Each Act Education Loan is eligible for a $300 principal reduction upon graduation (proof of graduation is required).
- If you choose full deferment, payments do not have to start on the Act Education Loan until six months after graduation or dropping below half-time status.
- You are not required to make payments while you are enrolled at least half-time in school.
- Your cosigner (if applicable) may be released from the loan after 48 consecutive on-time principal and interest payments are made, provided the borrower meets credit requirements.
- Up to $2,500 in interest may be tax deductible – you should consult a tax advisor for details.
- You will receive a 0.25% interest rate deduction for setting up automatic payments from a bank account during repayment.
Are there any states where the Act Education Loan is not available?
Yes. The Act Education loan is not available to residents of Wisconsin, Texas, Iowa, Washington. All others states are eligible. Note: there are no state restrictions for cosigners.
Residents of these states should review this private education loan option.
Examples
- If a student was attending the University of Texas but is a Virginia resident, he would be able to apply. If his cosigner lived in Texas, the cosigner would be able to apply as well.
- If a If a student was attending the University of Texas and is a Texas resident, he would not be able to apply.
