Thursday, September 18, 2008
Bluestone lead backing of SEQUAL Accredited Brokers
Bluestone Equity Release today confirmed its leadership of the reverse mortgage market by being the first specialist provider to require that mortgage brokers who wish to introduce its award-winning product must have achieved SEQUAL accredited Reverse Mortgage Consultant (RMC) status.Bluestone Group CEO, Mr Peter McGuinness, said the initiative is designed to further ensure Bluestone's customers continue to receive guidance from the highest level of trained consultants who specialise in the fast growing reverse mortgage market."Bluestone has been a strong supporter of SEQUAL since its foundation in 2005, and we were particularly keen to see the development of a principles-based framework for mortgage brokers in the absence of any regulation governing the distribution of the product," he said."The industry will always be susceptible to consumers receiving inadequate or inappropriate guidance on reverse mortgages without the support of subject matter experts. The advent of the SEQUAL RMC accreditation has materially contributed to the development of a well-educated and informed industry of mortgage brokers and financial planners," Mr McGuinness said.Since the launch of the SEQUAL RMC Program in 2006, there have been over 1000 brokers and financial planners who have signed up to the accreditation, followed more recently by the MFAA's requirement that all its members wishing to introduce reverse mortgages to customers will also have secured to SEQUAL RMC status.Kieren Dell, Executive Director of SEQUAL supports Bluestone’s view, "We are pleased to see Bluestone take a strong position in supporting the need for SEQUAL Accreditation. The SEQUAL RMC Accreditation is designed to provide additional protection to consumers by ensuring there are properly-trained professionals available to guide them towards the best solution for them".
Bluestone completes purchase of loan receivables from Provincial Finance
The Receivers of Provincial Finance Limited and its wholly owned subsidiary Consumer Credit Limited ("Provincial"), John Waller and Maurice Noone, partners of PricewaterhouseCoopers, today advised that Provincial had sold their remaining finance receivable ledgers to an entity managed by the Bluestone Group ("Bluestone"), an Australasian financial services business. Provincial was placed into receivership in May 2006, owing 11,000 debenture holders approximately $296.1m. Receiver Maurice Noone says, "We are pleased to announce that we have concluded this sale with Bluestone. Doing so allows us to make a further distribution to debenture holders of 8.0 cents in the dollar scheduled for Friday 12 September 2008. This brings total distributions to $268m, or 90.5 cents in the dollar. Mr Noone went on to say that "The sale is a great outcome, one that is in the best interests of debenture holders in that it means the Receivers can now make a further payment to debenture holders, bringing total repayments to near the original forecast ultimate recoveries from the receivership. Further, it allows debenture holders to receive early next month the loan receivable recoveries previously expected over the next two years under an orderly wind down of the finance receivable books." Perpetual Trust chief executive Louise Edwards says, "The earlier than anticipated return of funds is a good result for Provincial Finance debenture holders in the circumstances, and demonstrates that a positive outcome can be achieved through an orderly wind down of a loan book. The sale shows there are willing buyers in the market for loan books with quality assets. PricewaterhouseCoopers have done an excellent job in securing the best possible outcome for debenture holders." Mr Noone went on to state that "Completing the sale de-risks the collection process and simplifies the receivership down to one primary issue, the litigation against Veda Advantage. It also has the additional benefit of providing for ongoing employment to nearly all the remaining Provincial employees with Bluestone." In background, Bluestone was established in 2000 as a specialist financial services lender and asset manager. Bluestone has provided over $5 billion of loans to over 20,000 Australians and New Zealanders, and currently manages a portfolio of approximately $3 billion in Australia and New Zealand. Bluestone is owned by a number of private and institutional shareholders including Bank of Scotland International, UK fund manager, Cambridge Place and Crescent Capital and management. Receiver John Waller says, "It is likely there will be one more distribution to debenture holders but the timing and quantum of any payment is dependent on the outcome of ongoing litigation. Legal action against Veda Advantage is continuing and we will be holding a portion of the sale proceeds back to fund the litigation.". Mr Noone noted that a number of parties had contributed to the successful sale. "The staff and management of Provincial deserve thanks for their dedication, ongoing hard work and support in achieving this outcome. We would also like to thank the debenture holders for their patience over the last two years. "
Bluestone management complete buy-out of Group
Bluestone Group has been taken over in a management buyout part-funded by BOS International, a HBOS Australia subsidiary. The buy-out, for an undisclosed sum, was led by Founder and Executive Chairman, Alistair Jeffery. Mr Jeffery is the majority shareholder in the new Group.Bluestone is one of the leading non-conforming mortgage lenders in Australia and New Zealand. It was established in 2000, initially as a provider of residential mortgages to borrowers falling outside traditional bank criteria. The business expanded into New Zealand in 2003 and established a reverse mortgage business in 2004. Bluestone Equity Release is now the largest non-bank reverse mortgage lender in Australia. The Group has total assets in excess of $3b and reported cash earnings (CEBITDA) in the 6 months to December, 2007 of $15.8m. Corporate net assets (excluding Trust structures) exceed $35m.The management team led by Mr Jeffery includes Peter McGuinness, Group CEO and Mike Dilworth, CEO of Bluestone Servicing.Following the completion of the buyout, the company says it will be focussing on expanding its third party servicing and special servicing capabilities, whilst maintaining an origination footprint in Australia and New Zealand. The business recently agreed terms with Westpac Banking Corporation for a renewed $480m committed warehouse facility to support residential origination in Australia and NZ.Bluestone Servicing was established with a $5m investment in 2006, the proceeds of which were used to acquire and adapt a high quality platform system for higher intensity non-conforming mortgage management. Bluestone will also be expanding Bluestone Capital Management, a funds management business focussing on non-performing portfolios and loss mitigation strategies for financial institutions.Mr Jeffery said: “The buyout is a new chapter in the exciting history of Bluestone. I am very enthusiastic about the prospects for the business, and I’m delighted we have been able to gain the support of BOS International to back the transaction.“Bluestone has developed a reputation for identifying and capitalising on opportunities in challenging, rapidly changing markets. The current volatility in the capital markets is giving rise to a number of fascinating opportunities, where nimble and imaginative players will be able to prosper. The financial and tactical support of HBOS has been invaluable in helping us take control of the business”.Peter Shear, Head of Corporate and Structured Finance at BOS International, led the banks team on the buyout. He said:”Alistair and his management team have a long standing record of delivering success in the specialist mortgage market in Australia and New Zealand. We are delighted that our support has provided the team with the opportunity to purchase the business and we look forward to further growth in the coming years”.
Bluestone’s EQUITYtap Reverse Mortgage wins again
Bluestone’s EQUITYtap Reverse Mortgage has been awarded Gold for Best Reverse Mortgage (Non-bank category) in Money Magazine’s Best of the Best awards 2008. The award is the third consecutive Money Magazine recognition following Bluestone's Gold in 2006 and Silver in 2007.
Bluestone's innovative EQUITYtap Reverse Mortgage allows Australian property owners aged over 60, who have owner-occupied and residential investment properties, to be able to access additional funds in retirement.
The award recognised EQUITYtap’s product features and was ranked by point scoring, taking into consideration product features and rates.
In acknowledging this latest award Peter McGuinness, CEO Bluestone Equity Release said, “The Money Magazine award tops off a very successful year for EQUITYtap, during which it has become Australia’s most-awarded Reverse Mortgage. "This award, combined with the 5-star Cannex rating and industry awards EQUITYtap has received this year, is an acknowledgment of the extensive research Bluestone has carried out into the needs of Australia's ageing population, many of whom are using property to contribute to their day to day funds."Having received feedback from over 10,000 retirees who have enquired of its product, Bluestone has developed its Reverse Mortgage to deliver long term protection to consumers and financial stability with the support of Barclays bank. These are ingredients that Retirees look for with a product as important as Reverse Mortgages," Mr McGuinness said.
Bluestone's innovative EQUITYtap Reverse Mortgage allows Australian property owners aged over 60, who have owner-occupied and residential investment properties, to be able to access additional funds in retirement.
The award recognised EQUITYtap’s product features and was ranked by point scoring, taking into consideration product features and rates.
In acknowledging this latest award Peter McGuinness, CEO Bluestone Equity Release said, “The Money Magazine award tops off a very successful year for EQUITYtap, during which it has become Australia’s most-awarded Reverse Mortgage. "This award, combined with the 5-star Cannex rating and industry awards EQUITYtap has received this year, is an acknowledgment of the extensive research Bluestone has carried out into the needs of Australia's ageing population, many of whom are using property to contribute to their day to day funds."Having received feedback from over 10,000 retirees who have enquired of its product, Bluestone has developed its Reverse Mortgage to deliver long term protection to consumers and financial stability with the support of Barclays bank. These are ingredients that Retirees look for with a product as important as Reverse Mortgages," Mr McGuinness said.
Bluestone Equity Release Gets Top Cannex Rating
Specialist lender, Bluestone Group, has been recognised by independent financial services researcher Cannex as the leading provider of reverse mortgages in Australia, awarded its highest 5-star rating in the retiree funding sector. Subsidiary, Bluestone Equity Release, an early pioneer of reverse mortgage products since 2003 and now a major player, is among 17 lenders who offer 55 products which were evaluated by Cannex in its first-ever review of reverse mortgages. Bluestone's innovative EQUITYtap reverse mortgage allows Australian property owners aged over 60 who have owner-occupied and residential investment properties to be able access additional funds in retirement. In a report released today, Bluestone stood out as only one of two lenders found by Cannex as providing retirees with superior products, reflecting features "... which have seen... Bluestone cross the line ahead of the others". Cannex praised Bluestone for offering "six variations of their reverse mortgages, all with Protected Equity written in" as well as "variable capped interest rate loans with different pricing structures for lump sum drawdowns and instalments". CEO of Bluestone Equity Release, Mr Peter McGuinness welcomed Cannex initiative for providing a comprehensive and independent review and the resulting 5-star rating for Bluestone's products "We are delighted to have been recognised by such a highly regarded ratings service for our EQUITYtap Reverse Mortgage product," he said. "Bluestone Equity Release has maintained its focus on providing responsible and well-structured financial products to thousands of seniors throughout Australia and the Cannex 5-star rating represents strong endorsement of our efforts in this direction," Mr McGuinness said.
He said Bluestone aims to cater for the growing number of property owners interested in accessing the equity in their own homes or investment properties to supplement their retirement income or for investment purposes.
"Our pioneering move into reverse mortgages four years ago came after extensively researching the needs of Australia's ageing population, many of whom are asset-rich but cash poor, so unable enjoy the lifestyle they want in retirement.
"In the past, the only way in which Seniors could access the accumulated wealth in their property had been to sell their home and down-size, or move from the larger cities to smaller regional towns where property prices are lower," he said.
"This can place undue pressure on families to relocate, disrupting well established social structures and often meaning a significant cost in moving. There is strong evidence from our customers that Retirees want to stay in their home, certainly for the foreseeable future, and are interested in obtaining financial security to do so ".
"Through Bluestone, property owners over 60 are able to borrower a lump sum secured on their property as an alternative to selling," Mr McGuinness said.
He said Bluestone aims to cater for the growing number of property owners interested in accessing the equity in their own homes or investment properties to supplement their retirement income or for investment purposes.
"Our pioneering move into reverse mortgages four years ago came after extensively researching the needs of Australia's ageing population, many of whom are asset-rich but cash poor, so unable enjoy the lifestyle they want in retirement.
"In the past, the only way in which Seniors could access the accumulated wealth in their property had been to sell their home and down-size, or move from the larger cities to smaller regional towns where property prices are lower," he said.
"This can place undue pressure on families to relocate, disrupting well established social structures and often meaning a significant cost in moving. There is strong evidence from our customers that Retirees want to stay in their home, certainly for the foreseeable future, and are interested in obtaining financial security to do so ".
"Through Bluestone, property owners over 60 are able to borrower a lump sum secured on their property as an alternative to selling," Mr McGuinness said.
Conservative lending policies and consumer protections differentiate Australian non-conforming to US sub-prime markets
The Australian non-conforming industry's conservative lending policies and sensible consumer protections were strong and viable safeguards from current pressures being felt in international finance markets, Group CEO of leading Australian non-conforming lender, Bluestone Group, Mr Alistair Jeffery, told a US conference overnight. Addressing delegates to the IMN Sub-prime Conference in Las Vegas, Mr Jeffery said turmoil in the US sub-prime market underlined the need for fundamental principals in sound and proper lending, with the roots of the current US problems resting on a presumption of future house price appreciation and lack of lender conscionability in certain segments of the industry. "Australia is fortunate that conservative lending policies and consumer protections differentiates our non-conforming industry from US sub-prime markets, " he said. "Our lenders generally understand that just because a borrower’s property value is increasing does not mean they can suddenly afford a substantially larger loan. "They also understood that the use of teaser rates to improve apparent serviceability is flawed, and effectively increases both borrower and lenders reliance on future house price appreciation, " Mr Jeffery said. He said fundamental principals of good lending include knowing your customer well enough to determine if they can afford their loan, ensuring that they are protected from payment shocks which could materially lift their monthly payments, ensuring that lender and borrower interests are aligned by requiring a reasonable deposit, and not allowing risk factors to compound.
"Many risks faced by lenders could be masked in times of strong property appreciation, where consumers are able to refinance out of trouble." "Australia experienced very strong house price appreciation in 2003 – 05, but while this drove record loan volumes during that period the core risk measures of loan to value ratio and borrower serviceability across the industry did not deteriorate markedly."
Mr Jeffery said Australia had been well served by the Uniform Consumer Credit Code, and welcomed the recommendations earlier this week of the Federal Parliament Lending Practices Inquiry which called for uniform regulation of brokers and better reporting on enforcement rates within the market.
"The UCCC is a straight forward framework designed to ensure that consumers interests are protected when they borrow, a set of practices and policies introduced in the late 90s, which must be adhered to by all lenders in providing loans to home owners. "One powerful provision has been the requirement that a lender acts conscionably and not lend unless they have made reasonable enquiry into a borrower’s ability to pay. "Penalties for breaching this provision can be severe and include the possibility of having the loan set aside (made non-repayable), so lenders have been diligent about ensuring they comply with the UCCC. "This has limited certain practices that proliferated in the US such as no-doc lending, where little or no enquiry is made into the ability of a borrower to service their loan, " he said.
Mr Jeffery called on the Federal and State governments to use the UCCC as the framework to further strengthen lending practices and remove the current exemption for investment loans, which has been used by some lenders in an attempt to avoid the conscionability provisions. He also urged that the scope of the UCCC to be broadened to include the mortgage insurers, a move that would ensure that insurer’s interests and those of the lenders who they support are aligned and no moral gap emerges between the two industries.
Mr Jeffery said while the US sub-prime market had acted as a catalyst, the current dislocation in the global credit markets was now substantially broader and few sectors relying on open and liquid credit markets would be immune to the on-going stress. "What started as a credit event is now a mature liquidity disruption and investors, rating agents, issuers and even central banks are re-assessing their risk models to evaluate liquidity based risk, "he said.
“Markets have been reminded about the constantly changing nature of risk and traditional credit models are now being rapidly updated to reflect the new order. "When the debt markets re-open fully, bond margins will have widened to reflect appropriately higher credit spreads and pricing will include a new component of liquidity risk. "Issuers who operate transparently and create straightforward debt instruments with simple and sensible structural features are likely to be rewarded with lower liquidity spreads but conversely, exotic or opaque structures are likely to be penalised heavily, "Mr Jeffery said.
He said in the current financial turmoil, lenders have to reconsider term risk, an exposure created when the duration of assets of a bank or lender do not match the duration of their liabilities.
“Many lenders are currently being reminded about term risk and the merits of matched funding, which is the aligning of asset and liability duration and profile. Lenders who have chased higher returns by borrowing short and lending long (mortgages are generally considered a long term asset) are currently being punished”, Mr Jeffery said.
He said over 80% of Bluestone’s mortgages were match funded via securitisation, providing a secure, non-recourse, duration matched funding source for the business.
For further information, please contact: Alistair Jeffery Group CEO, Bluestone Group Tel 02 8115 5010fff123000@yahoo.cn Tony Pescott Chief Operating Officer, Bluestone GroupTel 02 8115 5020
"Many risks faced by lenders could be masked in times of strong property appreciation, where consumers are able to refinance out of trouble." "Australia experienced very strong house price appreciation in 2003 – 05, but while this drove record loan volumes during that period the core risk measures of loan to value ratio and borrower serviceability across the industry did not deteriorate markedly."
Mr Jeffery said Australia had been well served by the Uniform Consumer Credit Code, and welcomed the recommendations earlier this week of the Federal Parliament Lending Practices Inquiry which called for uniform regulation of brokers and better reporting on enforcement rates within the market.
"The UCCC is a straight forward framework designed to ensure that consumers interests are protected when they borrow, a set of practices and policies introduced in the late 90s, which must be adhered to by all lenders in providing loans to home owners. "One powerful provision has been the requirement that a lender acts conscionably and not lend unless they have made reasonable enquiry into a borrower’s ability to pay. "Penalties for breaching this provision can be severe and include the possibility of having the loan set aside (made non-repayable), so lenders have been diligent about ensuring they comply with the UCCC. "This has limited certain practices that proliferated in the US such as no-doc lending, where little or no enquiry is made into the ability of a borrower to service their loan, " he said.
Mr Jeffery called on the Federal and State governments to use the UCCC as the framework to further strengthen lending practices and remove the current exemption for investment loans, which has been used by some lenders in an attempt to avoid the conscionability provisions. He also urged that the scope of the UCCC to be broadened to include the mortgage insurers, a move that would ensure that insurer’s interests and those of the lenders who they support are aligned and no moral gap emerges between the two industries.
Mr Jeffery said while the US sub-prime market had acted as a catalyst, the current dislocation in the global credit markets was now substantially broader and few sectors relying on open and liquid credit markets would be immune to the on-going stress. "What started as a credit event is now a mature liquidity disruption and investors, rating agents, issuers and even central banks are re-assessing their risk models to evaluate liquidity based risk, "he said.
“Markets have been reminded about the constantly changing nature of risk and traditional credit models are now being rapidly updated to reflect the new order. "When the debt markets re-open fully, bond margins will have widened to reflect appropriately higher credit spreads and pricing will include a new component of liquidity risk. "Issuers who operate transparently and create straightforward debt instruments with simple and sensible structural features are likely to be rewarded with lower liquidity spreads but conversely, exotic or opaque structures are likely to be penalised heavily, "Mr Jeffery said.
He said in the current financial turmoil, lenders have to reconsider term risk, an exposure created when the duration of assets of a bank or lender do not match the duration of their liabilities.
“Many lenders are currently being reminded about term risk and the merits of matched funding, which is the aligning of asset and liability duration and profile. Lenders who have chased higher returns by borrowing short and lending long (mortgages are generally considered a long term asset) are currently being punished”, Mr Jeffery said.
He said over 80% of Bluestone’s mortgages were match funded via securitisation, providing a secure, non-recourse, duration matched funding source for the business.
For further information, please contact: Alistair Jeffery Group CEO, Bluestone Group Tel 02 8115 5010fff123000@yahoo.cn Tony Pescott Chief Operating Officer, Bluestone GroupTel 02 8115 5020
Emerald II - Second Reverse Mortgage Securitisation for Bluestone
Bluestone has completed its second (and also Australia's second) Reverse Mortgage securitisation – Emerald II.The notes were oversubscribed between 2.5 and six times, depending on the tranche, according to Bluestone Equity Release chief executive Peter McGuinness.
Spreads tightened between 25 and 45 per cent across the three tranches, he added, compared to Emerald I, which last year became Bluestone (and Australia’s) first-ever reverse mortgage securitisation.
“This reflects the increased confidence of investors looking at Bluestone Equity Release as an originator, and also in the asset class more generally.”
In turn, McGuinness said Bluestone customers now have “the confidence of knowing that their future loan advances are backed by AAA rated funding”.
The securitisation is the “first reverse mortgage deal in Australasia to have been rated by all three rating agencies”, he said.Details on the transaction are:
Emerald II Reverse Mortgage Series 2007-1 is Bluestone's and Australia's second Reverse Mortgage securitisation
Total of $124.2m in AUD issued notes; with 3 tranches $102.6m rated AAA, $11.2m of AA and $10.4m of A
Structure was rated by all 3 rating agencies and is the first Reverse Mortgage deal in Australasia to have been rated by all 3 rating agencies
Transaction is supported by a $71m liquidity facility, and $29m of committed and further advance facilities - all provided by Barclays
4 new investors were welcomed into the Emerald program. The majority (75%) of the notes were placed domestically, with the balance in Europe
Strong demand for the Notes, which were oversubscribed between 2.5 and 6 times, depending on the tranche
The deal was arranged by Barclays Capital
Spreads tightened between 25% and 45% over the 3 tranches, compared to Emerald I, reflecting the increased confidence of investors looking at Bluestone Equity Release as an originator, and the asset class more generally
Total Reverse Mortgage market grew to $1.5bn as at 31 December, with $700m of new Reverse Mortgage approvals in calendar 2006 (source: Deloitte Trowbridge,SEQUAL)
Bluestone Equity Release customers now have the confidence of knowing that their future loan advances are backed by AAA rated funding
Editor's Note
Bluestone provides specialist financial products to Australians and New Zealanders who fall outside the lending criteria of traditional lenders. The business has enjoyed strong growth since its launch in 2000 particularly amongst self-employed workers and the older community.
For further information, please contact:
Alistair Jeffery Group CEO, Bluestone Group Tel 02 8115 5010 fff123 Tony Pescott Chief Operating Officer, Bluestone GroupTel 02 8115 5020
Spreads tightened between 25 and 45 per cent across the three tranches, he added, compared to Emerald I, which last year became Bluestone (and Australia’s) first-ever reverse mortgage securitisation.
“This reflects the increased confidence of investors looking at Bluestone Equity Release as an originator, and also in the asset class more generally.”
In turn, McGuinness said Bluestone customers now have “the confidence of knowing that their future loan advances are backed by AAA rated funding”.
The securitisation is the “first reverse mortgage deal in Australasia to have been rated by all three rating agencies”, he said.Details on the transaction are:
Emerald II Reverse Mortgage Series 2007-1 is Bluestone's and Australia's second Reverse Mortgage securitisation
Total of $124.2m in AUD issued notes; with 3 tranches $102.6m rated AAA, $11.2m of AA and $10.4m of A
Structure was rated by all 3 rating agencies and is the first Reverse Mortgage deal in Australasia to have been rated by all 3 rating agencies
Transaction is supported by a $71m liquidity facility, and $29m of committed and further advance facilities - all provided by Barclays
4 new investors were welcomed into the Emerald program. The majority (75%) of the notes were placed domestically, with the balance in Europe
Strong demand for the Notes, which were oversubscribed between 2.5 and 6 times, depending on the tranche
The deal was arranged by Barclays Capital
Spreads tightened between 25% and 45% over the 3 tranches, compared to Emerald I, reflecting the increased confidence of investors looking at Bluestone Equity Release as an originator, and the asset class more generally
Total Reverse Mortgage market grew to $1.5bn as at 31 December, with $700m of new Reverse Mortgage approvals in calendar 2006 (source: Deloitte Trowbridge,SEQUAL)
Bluestone Equity Release customers now have the confidence of knowing that their future loan advances are backed by AAA rated funding
Editor's Note
Bluestone provides specialist financial products to Australians and New Zealanders who fall outside the lending criteria of traditional lenders. The business has enjoyed strong growth since its launch in 2000 particularly amongst self-employed workers and the older community.
For further information, please contact:
Alistair Jeffery Group CEO, Bluestone Group Tel 02 8115 5010 fff123 Tony Pescott Chief Operating Officer, Bluestone GroupTel 02 8115 5020
About Bluestone Mortgages
Bluestone Mortgages offer specialist home and business loan products throughout New Zealand to those who fall outside traditional lending policies. Our loans are designed to be more flexible to suit a variety of customers and situations. All require a first mortgage over residential real estate as security.
If you can't get a loan and you don't fit traditional lending criteria or lo-doc lending criteria, you're not alone. Many banks and non-banks use credit scoring, centralised processing and Lenders' Mortgage Insurance when assessing a loan application. The combination of these processes can restrict your chances of getting a loan.
We have stepped in and realise that a large proportion of the community do not fit 'in the box' but should be given an opportunity to start a new business or buy their home. Rather than applying rigid criteria, which disqualify a lot of people, we look at each application on its merits.
We may be able to help when others can't if:
You're self-employed but don't have 2 or 3 years worth of financial statements
You have an irregular employment pattern - part-time, contract or seasonal
You have inadequate or an irregular savings history
You have adverse entries (black marks) on you credit file
You have recently arrived in New Zealand
You're 55 years or older
You have credit card or other expensive debt you want to consolidate.
If you can't get a loan and you don't fit traditional lending criteria or lo-doc lending criteria, you're not alone. Many banks and non-banks use credit scoring, centralised processing and Lenders' Mortgage Insurance when assessing a loan application. The combination of these processes can restrict your chances of getting a loan.
We have stepped in and realise that a large proportion of the community do not fit 'in the box' but should be given an opportunity to start a new business or buy their home. Rather than applying rigid criteria, which disqualify a lot of people, we look at each application on its merits.
We may be able to help when others can't if:
You're self-employed but don't have 2 or 3 years worth of financial statements
You have an irregular employment pattern - part-time, contract or seasonal
You have inadequate or an irregular savings history
You have adverse entries (black marks) on you credit file
You have recently arrived in New Zealand
You're 55 years or older
You have credit card or other expensive debt you want to consolidate.
Non-resident loans
Looking for finance to purchase property in New Zealand?Bluestone’s Non-resident or cross border loan could be the solution for you.Whether you are newly arrived to New Zealand or reside overseas*, Bluestone may be able to help you fund the purchase or refinance of an investment residence in Australia or perhaps consolidate debts into a new mortgage at a lower interest rate.
You may be eligible for a Bluestone non-resident loan if you:
Permanently reside out of New Zealand and not a New Zealand citizen; or
Are a New Zealand citizen that has been living and working out of New Zealand; or
Reside in New Zealand however, are not a New Zealand citizen and do not have a permanent residents visa and;
Have security property in New Zealand older than 2 years;
Why choose Bluestone:
Access up to NZ$1million
Access up to 80% of the value of your security property (fees can also be capitalised)
Available for self employed (financials may not be required) and PAYE applicants
Optional ATM/EFTPOS Access card available to redraw funds
$0 upfront fees
Don’ let these stop you:
You are over 50, 60 or 70 years old
You are self-employed or have no financials
You’re a PAYG
You’re a contractor
You have an impaired credit rating
You have mortgage arrears
You have defaults
* Residents must reside in Canada, Republic of Ireland, United Kingdom, United States of America, Hong Kong, Singapore, South Korea, South Africa or Australia to apply.
Disclaimer: If a borrower is buying real estate in a country where they are not a permanent resident, they should check carefully regarding any restrictions on the purchase of real estate by foreign residents, and find out how income tax, GST, and other rates, taxes and duties may apply to their personal circumstances. Bluestone recommends that borrowers get expert advice from an accountant.
You may be eligible for a Bluestone non-resident loan if you:
Permanently reside out of New Zealand and not a New Zealand citizen; or
Are a New Zealand citizen that has been living and working out of New Zealand; or
Reside in New Zealand however, are not a New Zealand citizen and do not have a permanent residents visa and;
Have security property in New Zealand older than 2 years;
Why choose Bluestone:
Access up to NZ$1million
Access up to 80% of the value of your security property (fees can also be capitalised)
Available for self employed (financials may not be required) and PAYE applicants
Optional ATM/EFTPOS Access card available to redraw funds
$0 upfront fees
Don’ let these stop you:
You are over 50, 60 or 70 years old
You are self-employed or have no financials
You’re a PAYG
You’re a contractor
You have an impaired credit rating
You have mortgage arrears
You have defaults
* Residents must reside in Canada, Republic of Ireland, United Kingdom, United States of America, Hong Kong, Singapore, South Korea, South Africa or Australia to apply.
Disclaimer: If a borrower is buying real estate in a country where they are not a permanent resident, they should check carefully regarding any restrictions on the purchase of real estate by foreign residents, and find out how income tax, GST, and other rates, taxes and duties may apply to their personal circumstances. Bluestone recommends that borrowers get expert advice from an accountant.
Graduate Student Loan Consolidation
Graduate student loan consolidation is a smart repayment tool that will drastically lower your monthly student loan payments – keeping money in your pocket when you need it the most. With GradLoans.com, you can combine your undergraduate and graduate school loans together and refinance your monthly payments.
GradLoans.com offers both federal and private graduate student loan consolidation. Not sure which option you need? Call toll-free (877) 328-1565 and find out.
Federal Consolidation
Consolidating your federal loans can lower your monthly payment up to 53%. eSign your application today and be finished in minutes.
Private Consolidation
Our private loan consolidation program offers an interest only low monthly payment, and rate reductions for on-time automatic payments.
Graduate Loan Consolidation Financial Aid Blog
To consolidate or not to consolidate my private loans - that is the question.
Sep 5 2008
I have spoke to many students who are under the belief that consolidation is a means by which to lower your interest rate, however that is not the case. The real benefit to consolidating is extending your loan terms and minimizing your monthly payment. Granted,...
What is a FICO score?
Aug 19 2008
FICO comes from the Fair Isaac Company, which came up with the process of condensing all of your credit information into one three-digit number.
Three major credit bureaus hold your FICO score; Equifax, TransUnion, and Experian, and each calculate it a little different than the others....
GradLoans.com offers both federal and private graduate student loan consolidation. Not sure which option you need? Call toll-free (877) 328-1565 and find out.
Federal Consolidation
Consolidating your federal loans can lower your monthly payment up to 53%. eSign your application today and be finished in minutes.
Private Consolidation
Our private loan consolidation program offers an interest only low monthly payment, and rate reductions for on-time automatic payments.
Graduate Loan Consolidation Financial Aid Blog
To consolidate or not to consolidate my private loans - that is the question.
Sep 5 2008
I have spoke to many students who are under the belief that consolidation is a means by which to lower your interest rate, however that is not the case. The real benefit to consolidating is extending your loan terms and minimizing your monthly payment. Granted,...
What is a FICO score?
Aug 19 2008
FICO comes from the Fair Isaac Company, which came up with the process of condensing all of your credit information into one three-digit number.
Three major credit bureaus hold your FICO score; Equifax, TransUnion, and Experian, and each calculate it a little different than the others....
Graduate PLUS Loan for Grad Students
Introducing the Federal Graduate PLUS Loan! A low interest, federally backed student loan guaranteed by the U.S. Government. The Grad PLUS loan is a non-need credit based loan similar to a private student loan, but with the benefit of having a fixed interest rate and federal guarantee.
The Graduate PLUS Loan allows graduate students to borrow the total cost of their graduate education including tuition, room and board, supplies, lab expenses, and travel, less any other aid.
Interest is fixed, locked in at 8.5%
GradPLUS payments can be deferred while you are in school
No Cosigner Required
Click Here to Apply for the GradPLUS Loan
Some other financial aid options to explore
Graduate PLUS student loans are non-need based. GradPLUS Loans are based on your credit history. Click here to learn more about student credit!
Don't forget to search for scholarships and consider the Graduate Stafford loan.
How much can I borrow with a GradPLUS loan?
The yearly limit on a Graduate PLUS Loan is equal to your cost of attendance* minus any other financial aid you receive. For example, if your cost of attendance* is $6,000 and you receive $4,000 in other financial aid, you could borrow up to but no more than $2,000.
Do they get the money or do I?
Your lender (for a FFEL Graduate PLUS Student Loan) will send the loan funds to your school. Your school might require you to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount. The funds will first be applied to your tuition, fees, room and board, and other school charges. If any loan funds remain, you will receive the amount as a check or in cash, unless you authorize the amount to be released to your school account. Any remaining loan funds must be used for your education expenses.
What kind of credit do I need?
A qualified Graduate PLUS Loan borrower does not have an adverse credit history (defined in regulations as being 90 days or more delinquent on any debt, or having a credit report that shows default, discharge, foreclosure, repossession, tax lien, wage garnishment or write-off of a Title IV debt during the five years preceding the date of the credit report). Note that Graduate and Professional Student PLUS loans do not use any kind of a debt-to-income ratio or FICO score, unlike private education loans.
Do I need a co-signer?
You might need a co-signer if your credit is insufficient. Graduate students with excellent credit should not need a co-signer to apply for the loan.
Can I cancel the loan if I change my mind, even if I have signed the promissory note agreeing to the loan's terms?
Yes. Your school must notify you in writing whenever it credits your account with Graduate PLUS Loan funds. This notification must be sent to you no earlier than 30 days before, and no later than 30 days after, the school credits your account. You may cancel all or a portion of their loan if you inform your school within 14 days after the date your school sends this notice, or by the first day of the payment period, whichever is later. (Your school can tell you the first day of your payment period.) If you receive Graduate PLUS Loan funds directly by check, you may refuse the funds by not endorsing the check.
What's the interest rate on GradPLUS Loans?
GradPLUS Loan rates are fixed at 8.5%. Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full.
How do I apply for a Graduate PLUS Loans?
The fastest way to apply is using our online loan application. You can also give one of our loan counselors a call at 877-328-1565 for help or to apply over the phone.
Click Here to Apply for the GradPLUS Loan
The Graduate PLUS Loan allows graduate students to borrow the total cost of their graduate education including tuition, room and board, supplies, lab expenses, and travel, less any other aid.
Interest is fixed, locked in at 8.5%
GradPLUS payments can be deferred while you are in school
No Cosigner Required
Click Here to Apply for the GradPLUS Loan
Some other financial aid options to explore
Graduate PLUS student loans are non-need based. GradPLUS Loans are based on your credit history. Click here to learn more about student credit!
Don't forget to search for scholarships and consider the Graduate Stafford loan.
How much can I borrow with a GradPLUS loan?
The yearly limit on a Graduate PLUS Loan is equal to your cost of attendance* minus any other financial aid you receive. For example, if your cost of attendance* is $6,000 and you receive $4,000 in other financial aid, you could borrow up to but no more than $2,000.
Do they get the money or do I?
Your lender (for a FFEL Graduate PLUS Student Loan) will send the loan funds to your school. Your school might require you to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount. The funds will first be applied to your tuition, fees, room and board, and other school charges. If any loan funds remain, you will receive the amount as a check or in cash, unless you authorize the amount to be released to your school account. Any remaining loan funds must be used for your education expenses.
What kind of credit do I need?
A qualified Graduate PLUS Loan borrower does not have an adverse credit history (defined in regulations as being 90 days or more delinquent on any debt, or having a credit report that shows default, discharge, foreclosure, repossession, tax lien, wage garnishment or write-off of a Title IV debt during the five years preceding the date of the credit report). Note that Graduate and Professional Student PLUS loans do not use any kind of a debt-to-income ratio or FICO score, unlike private education loans.
Do I need a co-signer?
You might need a co-signer if your credit is insufficient. Graduate students with excellent credit should not need a co-signer to apply for the loan.
Can I cancel the loan if I change my mind, even if I have signed the promissory note agreeing to the loan's terms?
Yes. Your school must notify you in writing whenever it credits your account with Graduate PLUS Loan funds. This notification must be sent to you no earlier than 30 days before, and no later than 30 days after, the school credits your account. You may cancel all or a portion of their loan if you inform your school within 14 days after the date your school sends this notice, or by the first day of the payment period, whichever is later. (Your school can tell you the first day of your payment period.) If you receive Graduate PLUS Loan funds directly by check, you may refuse the funds by not endorsing the check.
What's the interest rate on GradPLUS Loans?
GradPLUS Loan rates are fixed at 8.5%. Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full.
How do I apply for a Graduate PLUS Loans?
The fastest way to apply is using our online loan application. You can also give one of our loan counselors a call at 877-328-1565 for help or to apply over the phone.
Click Here to Apply for the GradPLUS Loan
Graduate Private Student Loans
Scholarships and federal loans, more often than not, aren't enough to cover the entire cost of graduate school. The GradLoans Graduate School Loan will help you bridge the gap between federal financial aid and the true cost of a graduate education; Annual maximum is $45,000. Created especially for graduate students like you with unmet financial need, our Graduate Student Loan program will help you achieve your professional and educational goals.
Apply Online for a Private Student Loan
You can use a grad school loan to cover any education related expenses, including, student computers, books and room and board. Additional Benefits include:
Defer paymet while in schol and for a six-month grace period after graduation5
Exclusive Graduation Reward - $300 principal reduction on every private student loan upon graduation1
No Upfront Fees!2
Lower your interest rate by 0.25% when you choose to have your payments automatically deducted from your personal bank account3
Rates as low as one-month London Interbank Offered Rate (LIBOR) + 2.5%, currently 4.5326% APR4
Borrow up to the cost of education minus financial aid received
How do I qualify?
Must be enrolled at least half-time at an eligible school.
Must be a U.S. citizen or permanent resident or have a cosigner who is.
You must be the legal age of majority or at least 18 years of age with a cosigner who is legal age of majority.*
Your permanent residence is NOT in Texas, Wisconsin, Washington, Illinois, or Iowa. (There is no state restriction for cosigners.) Residents of these states should review this alternative student loan.
Many borrowers will need a cosigner. Borrowers without a cosigner must have at least 27 months of established credit history.
Undergraduate students may apply for Private Student Loans for College at www.AlternativeStudentLoan.com
Apply Online for a Private Student Loan
How much can I borrow with a graduate student loan?
Annual minimum of $3,000
Annual maximum of $45,000
Degree Program
Limits for each Academic Year
Dental School Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Law School Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Medical School Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Osteopathic Medicine
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
MBA Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Business School Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Nursing School Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Other Programs
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Apply Online for a Private Student Loan
Loan Repayment
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.
Apply Online for a Private Student Loan
* The legal age for entering into contracts is 18 years of age in every state except Alabama and Nebraska (19 years old), and Mississippi and Puerto Rico (21 years old). 1 Proof of graduation is required. 2 A repayment finance charge may apply based on your or your cosigner's credit history. 3 The 0.25% rate reduction is available to borrowers who arrange with their servicer to automatically deduct monthly payments from their personal bank account. Savings programs are effective for all loans disbursed on or after October 13, 2006. 4 LIBOR stands for London Interbank Offered Rate. The one-month LIBOR is the Current Index, as published in the "Money Rates" section of the Wall Street Journal (Eastern Edition). Your variable interest rate and Annual Percentage Rate (APR) may be higher depending upon your credit history and will increase or decrease if the one-month LIBOR index changes. Your variable interest rate is calculated by adding the current one-month LIBOR index (captured on the 25th business day of each month and rounded up to the nearest 1/8th of one percent) to your margin. The current one-month LIBOR index was 2.500% on 6/1/08. This APR example assumes a $10,000 undergraduate, cosigned, loan disbursed over two transactions with a deferment period of 45 months upon initial disbursement and a six month grace period upon graduation, a 25 year repayment term with no repayment finance charge, and a 2.50% margin. Margins can range from 2% to 8% (depending whether you are an undergraduate or graduate, if the loan is co-signed and upon your or your cosigner's credit history) and repayment finance charges can range from 0% to 5.5% (depending upon your or your cosigner's credit history). 5 Interest will continue to accrue while your private student loan payments are deferred, and it will be capitalized (added to your principal loan balance) when repayment begins.
Apply Online for a Private Student Loan
You can use a grad school loan to cover any education related expenses, including, student computers, books and room and board. Additional Benefits include:
Defer paymet while in schol and for a six-month grace period after graduation5
Exclusive Graduation Reward - $300 principal reduction on every private student loan upon graduation1
No Upfront Fees!2
Lower your interest rate by 0.25% when you choose to have your payments automatically deducted from your personal bank account3
Rates as low as one-month London Interbank Offered Rate (LIBOR) + 2.5%, currently 4.5326% APR4
Borrow up to the cost of education minus financial aid received
How do I qualify?
Must be enrolled at least half-time at an eligible school.
Must be a U.S. citizen or permanent resident or have a cosigner who is.
You must be the legal age of majority or at least 18 years of age with a cosigner who is legal age of majority.*
Your permanent residence is NOT in Texas, Wisconsin, Washington, Illinois, or Iowa. (There is no state restriction for cosigners.) Residents of these states should review this alternative student loan.
Many borrowers will need a cosigner. Borrowers without a cosigner must have at least 27 months of established credit history.
Undergraduate students may apply for Private Student Loans for College at www.AlternativeStudentLoan.com
Apply Online for a Private Student Loan
How much can I borrow with a graduate student loan?
Annual minimum of $3,000
Annual maximum of $45,000
Degree Program
Limits for each Academic Year
Dental School Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Law School Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Medical School Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Osteopathic Medicine
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
MBA Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Business School Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Nursing School Loans
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Other Programs
Annual Minimum is $3,000; Annual Maximum is $45,000 and is Based on Cost of Attendance; Aggregate Academic Lifetime Maximum is $150,000
Apply Online for a Private Student Loan
Loan Repayment
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.
Apply Online for a Private Student Loan
* The legal age for entering into contracts is 18 years of age in every state except Alabama and Nebraska (19 years old), and Mississippi and Puerto Rico (21 years old). 1 Proof of graduation is required. 2 A repayment finance charge may apply based on your or your cosigner's credit history. 3 The 0.25% rate reduction is available to borrowers who arrange with their servicer to automatically deduct monthly payments from their personal bank account. Savings programs are effective for all loans disbursed on or after October 13, 2006. 4 LIBOR stands for London Interbank Offered Rate. The one-month LIBOR is the Current Index, as published in the "Money Rates" section of the Wall Street Journal (Eastern Edition). Your variable interest rate and Annual Percentage Rate (APR) may be higher depending upon your credit history and will increase or decrease if the one-month LIBOR index changes. Your variable interest rate is calculated by adding the current one-month LIBOR index (captured on the 25th business day of each month and rounded up to the nearest 1/8th of one percent) to your margin. The current one-month LIBOR index was 2.500% on 6/1/08. This APR example assumes a $10,000 undergraduate, cosigned, loan disbursed over two transactions with a deferment period of 45 months upon initial disbursement and a six month grace period upon graduation, a 25 year repayment term with no repayment finance charge, and a 2.50% margin. Margins can range from 2% to 8% (depending whether you are an undergraduate or graduate, if the loan is co-signed and upon your or your cosigner's credit history) and repayment finance charges can range from 0% to 5.5% (depending upon your or your cosigner's credit history). 5 Interest will continue to accrue while your private student loan payments are deferred, and it will be capitalized (added to your principal loan balance) when repayment begins.
Graduate Stafford Student Loans
The average cost of graduate school has increased nearly 35% in the last 10 years. The graduate Stafford student loan can help you meet the cost of a graduate education. Graduate Stafford student loans are available in two forms:
Subsidized Stafford Loans are awarded based on financial need. You will not be charged interest before you begin repayment or during periods of deferment. The federal government "subsidizes" the interest during these periods of times.
Unsubsidized Stafford Loans are not awarded based on financial need. Any eligible student can take out unsubsidized stafford loans. You will be charged interest from the time the loan is disbursed, to the time the loan is repaid in full.
You may also find that federal financial aid, including the graduate Stafford student loan, may not be enough to completely meet the cost of graduate school. To meet the total cost, investigate private graduate loans as well.
Apply Now for the Stafford Loan
How much can I borrow?
The amount you can borrow is based on your year in school and your status as a student. Independent students may borrow more because they are paying for college by themselves. Students may not always qualify for the maximum amount - check with your financial aid office.
1st Year 2nd Year 3rd and 4th Years (and 5th year, where applicable)
$20,500 - No more than $8,500 can be in subsidized loans
Maximum Total Debt from Stafford Loans:
$138,500 - No more than $65,500 can be in subsidized loans.
The graduate debt limit includes Stafford Loans received for undergraduate study.
Am I eligible for this loan?
You must be enrolled at least half time in an eligible program of study. Students not enrolled at least half time might consider a continuing education loan which allows you to borrow to cover the costs of your continuing education.
How can I get this loan?
You first must complete the Free Application for Federal Student Aid (FAFSA) or Renewal FAFSA. After the FAFSA is processed your school will review the results and inform you about your loan eligibility. Next you must complete the Master Promissory Note, which is the promissory note for your loan. Your school may require that you complete their form, again - check with your financial aid office. You can also request the MPN from StaffordLoan.com.
What is the interest rate of this loan?
Graduate Stafford loans (both subsidized and unsubsidized) have been set at a fixed interest rate of 6.8% through 2013.
Are there any special fees I will pay?
You may be charged up to a 1% guarantee fee and a 1.5% origination fee. Recent changes in the Higher Education Reauthorization Act have prompted an annual reduction in the origination fee. By July 2010, there will be no origination fee.
Apply Now for the Stafford Loan
When will I get my money?
In most cases, your loan will be disbursed in two installments and sent directly to the school as determined by your financial aid office. Your loan money will be used to pay your tuition and fees. If loan money remains your school will credit your student account or pay you directly.
Can I cancel the loan?
Yes. Your school must notify you in writing whenever it credits your account with your loan proceeds. This notification must be sent to you no earlier than 30 days before, and no later than 30 days after, the school credits your account. You may cancel all or a portion of your loan if you inform your school that you wish to do so within 14 days after the date that your school sends you this notice, or by the first day of the payment period, whichever is later. Your school can tell you the first day of your payment period.
What are my repayment options?
The normal repayment for this loan is 10 years. You may be able to extend repayment by deferring or consolidating your loans. You may choose one of the following plans:
Standard Repayment: requires you to pay a fixed amount each month-- at least $50 or the interest that has accrued.
Graduated Repayment: sets your payments lower at first and then increases them over time. Each of your payments must equal the interest accrued on the loan between scheduled payments.
Income-Sensitive Repayment: bases your monthly payment on your yearly income and your loan amount. Payments may change as your income rises or falls.
Extended Repayment: is for borrowers with FFELP loans totaling more than $30,000. This plan offers a choice of fixed or graduated payments over a period of up to 25 years.
Other financial aid options
Also consider taking out Graduate Private Student Loans. Graduate private student loans lend up to the total cost of education, do not require the FAFSA and can be used for any education related expense, including computers, books, housing, etc. Scholarships are also a great way to get extra money for your graduate program.
Apply Now for the Stafford Loan
Graduate school statistics taken from US Department of Education National Center for Education Statistics data.
Subsidized Stafford Loans are awarded based on financial need. You will not be charged interest before you begin repayment or during periods of deferment. The federal government "subsidizes" the interest during these periods of times.
Unsubsidized Stafford Loans are not awarded based on financial need. Any eligible student can take out unsubsidized stafford loans. You will be charged interest from the time the loan is disbursed, to the time the loan is repaid in full.
You may also find that federal financial aid, including the graduate Stafford student loan, may not be enough to completely meet the cost of graduate school. To meet the total cost, investigate private graduate loans as well.
Apply Now for the Stafford Loan
How much can I borrow?
The amount you can borrow is based on your year in school and your status as a student. Independent students may borrow more because they are paying for college by themselves. Students may not always qualify for the maximum amount - check with your financial aid office.
1st Year 2nd Year 3rd and 4th Years (and 5th year, where applicable)
$20,500 - No more than $8,500 can be in subsidized loans
Maximum Total Debt from Stafford Loans:
$138,500 - No more than $65,500 can be in subsidized loans.
The graduate debt limit includes Stafford Loans received for undergraduate study.
Am I eligible for this loan?
You must be enrolled at least half time in an eligible program of study. Students not enrolled at least half time might consider a continuing education loan which allows you to borrow to cover the costs of your continuing education.
How can I get this loan?
You first must complete the Free Application for Federal Student Aid (FAFSA) or Renewal FAFSA. After the FAFSA is processed your school will review the results and inform you about your loan eligibility. Next you must complete the Master Promissory Note, which is the promissory note for your loan. Your school may require that you complete their form, again - check with your financial aid office. You can also request the MPN from StaffordLoan.com.
What is the interest rate of this loan?
Graduate Stafford loans (both subsidized and unsubsidized) have been set at a fixed interest rate of 6.8% through 2013.
Are there any special fees I will pay?
You may be charged up to a 1% guarantee fee and a 1.5% origination fee. Recent changes in the Higher Education Reauthorization Act have prompted an annual reduction in the origination fee. By July 2010, there will be no origination fee.
Apply Now for the Stafford Loan
When will I get my money?
In most cases, your loan will be disbursed in two installments and sent directly to the school as determined by your financial aid office. Your loan money will be used to pay your tuition and fees. If loan money remains your school will credit your student account or pay you directly.
Can I cancel the loan?
Yes. Your school must notify you in writing whenever it credits your account with your loan proceeds. This notification must be sent to you no earlier than 30 days before, and no later than 30 days after, the school credits your account. You may cancel all or a portion of your loan if you inform your school that you wish to do so within 14 days after the date that your school sends you this notice, or by the first day of the payment period, whichever is later. Your school can tell you the first day of your payment period.
What are my repayment options?
The normal repayment for this loan is 10 years. You may be able to extend repayment by deferring or consolidating your loans. You may choose one of the following plans:
Standard Repayment: requires you to pay a fixed amount each month-- at least $50 or the interest that has accrued.
Graduated Repayment: sets your payments lower at first and then increases them over time. Each of your payments must equal the interest accrued on the loan between scheduled payments.
Income-Sensitive Repayment: bases your monthly payment on your yearly income and your loan amount. Payments may change as your income rises or falls.
Extended Repayment: is for borrowers with FFELP loans totaling more than $30,000. This plan offers a choice of fixed or graduated payments over a period of up to 25 years.
Other financial aid options
Also consider taking out Graduate Private Student Loans. Graduate private student loans lend up to the total cost of education, do not require the FAFSA and can be used for any education related expense, including computers, books, housing, etc. Scholarships are also a great way to get extra money for your graduate program.
Apply Now for the Stafford Loan
Graduate school statistics taken from US Department of Education National Center for Education Statistics data.
Compare Federal and Private Graduate Loans
are a variety of low-interest loans available to graduate students. They are similar to the undergraduate loan programs, typically with higher annual loan limit amounts. Some loans are unique to a graduate student's program of study.
Federal Stafford
Graduate Private
Graduate PLUS
Annual Limits
Up to $20,500/year
Up to $45,000/year
Cost less Aid
Checks Sent
To school
Sent to borrower
To school
Cosigner required
No
Usually
No
Approval Basis
Need (based on FAFSA)
Credit (no FAFSA required)
Credit (FAFSA usually required)
Rates
Fixed at 6.8%
Variable - credit based
Fixed at 8.5%
Repayment Term
Up to 10 years
Up to 20 years
Up to 10 years
Apply Now
Apply Now
Apply Now
GradLoans.com is a service of the Student Loan Network - a leader in education funding and your online guide to graduate school student loans, Grants and Scholarships and Financial Aid. We will walk you through the entire loan process, from completing the FAFSA (Free Application for Federal Student Aid) to application through receiving your check. Hopefully, all your questions will be answered here.
In addition to a wealth of information on your financial aid options, we provide detailed information on our student loan programs:
The Federal Stafford Loan for Graduate Study
Private Student Loans for Graduate Students
Consolidation Loans for Graduates
PLUS Loans for Graduate Students
Start Managing your Credit
For those of you in specific fields of study, we have developed specific programs to meet your specific need. Please visit:
Dental School Loan Application
Medical School Loan Application
Business School Loan Application
Law School Loan Application
MBA Loans
Nursing School Loans
Other graduate fields of study
Federal Stafford
Graduate Private
Graduate PLUS
Annual Limits
Up to $20,500/year
Up to $45,000/year
Cost less Aid
Checks Sent
To school
Sent to borrower
To school
Cosigner required
No
Usually
No
Approval Basis
Need (based on FAFSA)
Credit (no FAFSA required)
Credit (FAFSA usually required)
Rates
Fixed at 6.8%
Variable - credit based
Fixed at 8.5%
Repayment Term
Up to 10 years
Up to 20 years
Up to 10 years
Apply Now
Apply Now
Apply Now
GradLoans.com is a service of the Student Loan Network - a leader in education funding and your online guide to graduate school student loans, Grants and Scholarships and Financial Aid. We will walk you through the entire loan process, from completing the FAFSA (Free Application for Federal Student Aid) to application through receiving your check. Hopefully, all your questions will be answered here.
In addition to a wealth of information on your financial aid options, we provide detailed information on our student loan programs:
The Federal Stafford Loan for Graduate Study
Private Student Loans for Graduate Students
Consolidation Loans for Graduates
PLUS Loans for Graduate Students
Start Managing your Credit
For those of you in specific fields of study, we have developed specific programs to meet your specific need. Please visit:
Dental School Loan Application
Medical School Loan Application
Business School Loan Application
Law School Loan Application
MBA Loans
Nursing School Loans
Other graduate fields of study
Links
AAMC financing your medical career: http://www.aamc.org/students/financing/start.htm
AMA finance section: http://www.ama-assn.org/ama/pub/category/5010.html
Major Lenders:
Bank of America: http://www.bankofamerica.com/
Citibank: http://www.citibank.com/
University Credit Union: http://www.ucu.org/
Wells Fargo: http://www.wellsfargo.com/
Medloans: http://www.aamc.org/students/medloans/start.htm
Chase: http://www.chase.com/
Repayment Calculator: http://www.salliemae.com/calculators/repayment.html
Loan locator: http://www.nslc.org/
Servicers:
SallieMae: http://www.salliemae.com/
NellieMae: http://www.nelliemae.com/
Consolidation:
Salliemae Smartloan: http://www.salliemae.com/loans/smart.html
Medloans: http://www.aamc.org/students/medloans/consolidation/start.htm
Direct Loans: http://loanconsolidation.ed.gov/
Loan Repayment/Forgiveness Programs: http://www.aamc.org/students/financing/repayment/start.htm
National Health Service Corps: http://www.bphc.hrsa.gov/nhsc
Navy: http://www.navyjobs.com/coneducation/advanced_degrees.jsp
Army: http://www.goarmy.com/findrecr/index.htm
Air Force: http://education.airforce.com/financial/index.html
Indian Health Service: http://www.ihs.gov/JobsCareerDevelop/DHPS/LRP/lrpsc.asp
Moneymatters Listserv: http://www.aamc.org/stuapps/finaid/debtmgmt/moneymat.htm
AAMC Layman's guide to debt management: http://www.aamc.org/stuapps/finaid/layman/start.htm
TD Waterhouse retirement planner:
http://www.tdwaterhouse.com/planning/retirement_center/retirement_advisor/index.html
Retirement glossary:
http://personal100.fidelity.com/retirement/content/help/glossary.html.tvsr
Links to movers:
http://www.uhaul.com/
http://www.ryder.com/
http://www.penske.com/
http://www.movingcompanies.com/ http://www.topmovingcompanies.com/
Credit report:
Equifax: (800) 685-1111, http://www.equifax.comExperian: (800) 397-3742, http://www.experian.comTrans Union: (800) 888-4213, http://www.transunion.com
Credit score: http://www.eloan.com/
AMA finance section: http://www.ama-assn.org/ama/pub/category/5010.html
Major Lenders:
Bank of America: http://www.bankofamerica.com/
Citibank: http://www.citibank.com/
University Credit Union: http://www.ucu.org/
Wells Fargo: http://www.wellsfargo.com/
Medloans: http://www.aamc.org/students/medloans/start.htm
Chase: http://www.chase.com/
Repayment Calculator: http://www.salliemae.com/calculators/repayment.html
Loan locator: http://www.nslc.org/
Servicers:
SallieMae: http://www.salliemae.com/
NellieMae: http://www.nelliemae.com/
Consolidation:
Salliemae Smartloan: http://www.salliemae.com/loans/smart.html
Medloans: http://www.aamc.org/students/medloans/consolidation/start.htm
Direct Loans: http://loanconsolidation.ed.gov/
Loan Repayment/Forgiveness Programs: http://www.aamc.org/students/financing/repayment/start.htm
National Health Service Corps: http://www.bphc.hrsa.gov/nhsc
Navy: http://www.navyjobs.com/coneducation/advanced_degrees.jsp
Army: http://www.goarmy.com/findrecr/index.htm
Air Force: http://education.airforce.com/financial/index.html
Indian Health Service: http://www.ihs.gov/JobsCareerDevelop/DHPS/LRP/lrpsc.asp
Moneymatters Listserv: http://www.aamc.org/stuapps/finaid/debtmgmt/moneymat.htm
AAMC Layman's guide to debt management: http://www.aamc.org/stuapps/finaid/layman/start.htm
TD Waterhouse retirement planner:
http://www.tdwaterhouse.com/planning/retirement_center/retirement_advisor/index.html
Retirement glossary:
http://personal100.fidelity.com/retirement/content/help/glossary.html.tvsr
Links to movers:
http://www.uhaul.com/
http://www.ryder.com/
http://www.penske.com/
http://www.movingcompanies.com/ http://www.topmovingcompanies.com/
Credit report:
Equifax: (800) 685-1111, http://www.equifax.comExperian: (800) 397-3742, http://www.experian.comTrans Union: (800) 888-4213, http://www.transunion.com
Credit score: http://www.eloan.com/
Debt Management Assistance
The Association of American Medical Colleges (AAMC) has two great debt management resources available free to residents.
An on-line listserv called MONEYMATTERS contains articles of interest. Residents can also ask questions about loan repayment or available deferments, which are researched by AAMC staff and answered on MONEYMATTERS. To subscribe, simply follow these instructions:
Send an e-mail to: majordomo@aamcinfo.aamc.org
In the subject field, please provide information that identifies your residency program or GME affiliation.
In the body of the message, type: subscribe moneymatters.
Consequences of Default
Student loan defaults result from skipped, late, or nonexistent payments. The lender will seek reimbursement from the guarantee agency (and ultimately the federal government) who will pursue you for payment. When you default on your loans, the following things occur:
A negative credit history will be reported to a national credit bureau. This will affect your ability to buy a house or to get automobile loans, start up loans for a practice, credit cards, or other financing.
The entire unpaid amount of your loan, including interest, may become immediately due and payable.
You can be taken to court.
Your Federal and State income tax refunds will be withheld.
Money can be taken out of your paycheck to repay delinquent loans. This is called garnishing your wages.
Any refunds due, from any state agency, can be collected by the state. This includes medical reimbursements to physicians
State lottery prizes will be used to repay your defaulted loans first, before you receive any winnings.
A Final Word
If you start getting into trouble with your loan repayments, don't wait until it's too late to ask for help. Call your bank or your loan servicer if you don't understand the forms they send to you. If you can't get in touch with anyone or you aren't satisfied with the assistance you get, contact the UCLA Student and Resident Financial Services Office. We can help by calling lenders and servicers on your behalf and by explaining the various procedures and forms to you.
An on-line listserv called MONEYMATTERS contains articles of interest. Residents can also ask questions about loan repayment or available deferments, which are researched by AAMC staff and answered on MONEYMATTERS. To subscribe, simply follow these instructions:
Send an e-mail to: majordomo@aamcinfo.aamc.org
In the subject field, please provide information that identifies your residency program or GME affiliation.
In the body of the message, type: subscribe moneymatters
Consequences of Default
Student loan defaults result from skipped, late, or nonexistent payments. The lender will seek reimbursement from the guarantee agency (and ultimately the federal government) who will pursue you for payment. When you default on your loans, the following things occur:
A negative credit history will be reported to a national credit bureau. This will affect your ability to buy a house or to get automobile loans, start up loans for a practice, credit cards, or other financing.
The entire unpaid amount of your loan, including interest, may become immediately due and payable.
You can be taken to court.
Your Federal and State income tax refunds will be withheld.
Money can be taken out of your paycheck to repay delinquent loans. This is called garnishing your wages.
Any refunds due, from any state agency, can be collected by the state. This includes medical reimbursements to physicians
State lottery prizes will be used to repay your defaulted loans first, before you receive any winnings.
A Final Word
If you start getting into trouble with your loan repayments, don't wait until it's too late to ask for help. Call your bank or your loan servicer if you don't understand the forms they send to you. If you can't get in touch with anyone or you aren't satisfied with the assistance you get, contact the UCLA Student and Resident Financial Services Office. We can help by calling lenders and servicers on your behalf and by explaining the various procedures and forms to you.
Consolidation Programs
Loan consolidation programs are offered by lenders, loan servicers and by the Federal government. Programs allow you to consolidate the following types of loans into one new large loan.
Federal Stafford and/or Federal Direct Loans
Federal Perkins Loans
Health and Human Services Loans (except Primary Care Loans)
Virtually all medical students receive a Direct Loan or a Stafford Loan as part of their financial aid award. Many students also received a Stafford Loan or a Federal Direct Loan during undergraduate school. Some students receive other loans, including Federal Perkins Loans or loans through the Department of Health and Human Services (e.g. Loans for Disadvantaged Students). While the interest rate on Perkins and HHS loans is fixed, the interest rate on Federal Stafford Loans and Federal Direct Loans is variable and is set each spring for the period July 1 through June 30.
The interest rate for a Consolidation loan is set at a weighted average rate of the loans being consolidated, rounded up to the nearest 1/8th of a percent, not to exceed 8.25%.
There are pros, cons, and other considerations pertaining to loan consolidation. You need to research the program carefully. Think about your own particular situation, which may be different from your friend’s situation or the “typical” student mentioned in many bank publications. Every borrower is unique.
If you are thinking about consolidating with an agency or servicer you haven’t used before, gather information carefully! When talking with the agency’s “rep,” have all your “antennas out.” Is the person easy to reach? Are they knowledgeable? Do they “tune into” your particular situation?
Please note that repayment benefits can vary from lender to lender. Thus, if you want to compare specific options, you should visit the web site for your particular lender, although the site might appear to be more “sales” oriented.
We have listed some of the pros, cons, and other considerations to think about as you decide whether or not consolidation is the right choice for you to make.
Interest Rate
Your Consolidation loan will have a fixed rate of interest, based on the underlying loans you include in the Consolidation loan, rounded up to the nearest 1/8th of a percent subject to a cap of 8.25%.
Once you lock in a fixed rate on a Consolidation loan, you cannot take advantage of any subsequent decline in interest rates for variable rate Stafford/Direct Loans. Thus, if at the next interest rate adjustment on July, rates are slated to drop below the rates currently in effect, the rate on your Consolidation loan will remain unchanged. Of course, if interest rates rise above current levels and you did not consolidate before July 1, you will have lost the opportunity to “lock in” today’s low rates.
Convenience
You can consolidate your separate federal loan payments into one monthly payment. Many borrowers believe this greatly facilitates the student loan repayment process.
Non-federal loans, such as University loans or private alternative loans cannot be included in a Consolidation loan. Federal Perkins and Health and Human Services (HHS) loans* have a 5% fixed rate interest and generally have more generous deferment options than Stafford/Direct Loans. You also lose your in-school interest subsidy, so if you were thinking about returning to school, you would definitely not want to include these in a Consolidation loan. Regarding the interest rate, some borrowers believe the convenience of a single payment outweighs the slightly lower interest rate on certain loans.
*HHS loans include Primary Care Loan (PCL), and Loans for Disadvantaged Students (LDS)
Borrower Benefits
Some of the consolidation lenders/servicers offer a 1-2% discount on your loan once you make a certain number of payments “on time,” usually within 10 or 15 days of the due date. Most also offer a reduction in interest if you agree to make electronic payments directly from your checking or savings account.
Note: borrower benefits are not included in the loan promissory note and cannot be guaranteed into the future.
Financial Implications
Pros: As shown in the chart below, your monthly repayments can be substantially lower with a Consolidation loan that extends the repayment period beyond the standard 10 years. This, of course, increases your monthly cash flow. However, wWhen you extend the repayment period, your interest payments and thus your total payments will be higher. For example, under the 10-year plan, if you borrowed $80,000, you’ll pay $37,746 in interest. However, if you take 30 years to repay, you’ll pay $92,570 in interest, a difference of $54,924!
You can solve this problem by signing up for a shorter repayment period or by prepaying your loan principal by adding an additional amount to your monthly payment. The latter approach gives you the best of both worlds. You’ll enjoy the benefits of a single monthly payment that is lower than the combined payments on your unconsolidated loans, plus you can prepay some of your principal whenever you have the extra funds to do so. Since you can repay your federal loans at any time (consolidation or otherwise) without penalty, you can control the length of your repayment period and the total amount of interest you pay over the life of your loan.
Federal Stafford and/or Federal Direct Loans
Federal Perkins Loans
Health and Human Services Loans (except Primary Care Loans)
Virtually all medical students receive a Direct Loan or a Stafford Loan as part of their financial aid award. Many students also received a Stafford Loan or a Federal Direct Loan during undergraduate school. Some students receive other loans, including Federal Perkins Loans or loans through the Department of Health and Human Services (e.g. Loans for Disadvantaged Students). While the interest rate on Perkins and HHS loans is fixed, the interest rate on Federal Stafford Loans and Federal Direct Loans is variable and is set each spring for the period July 1 through June 30.
The interest rate for a Consolidation loan is set at a weighted average rate of the loans being consolidated, rounded up to the nearest 1/8th of a percent, not to exceed 8.25%.
There are pros, cons, and other considerations pertaining to loan consolidation. You need to research the program carefully. Think about your own particular situation, which may be different from your friend’s situation or the “typical” student mentioned in many bank publications. Every borrower is unique.
If you are thinking about consolidating with an agency or servicer you haven’t used before, gather information carefully! When talking with the agency’s “rep,” have all your “antennas out.” Is the person easy to reach? Are they knowledgeable? Do they “tune into” your particular situation?
Please note that repayment benefits can vary from lender to lender. Thus, if you want to compare specific options, you should visit the web site for your particular lender, although the site might appear to be more “sales” oriented.
We have listed some of the pros, cons, and other considerations to think about as you decide whether or not consolidation is the right choice for you to make.
Interest Rate
Your Consolidation loan will have a fixed rate of interest, based on the underlying loans you include in the Consolidation loan, rounded up to the nearest 1/8th of a percent subject to a cap of 8.25%.
Once you lock in a fixed rate on a Consolidation loan, you cannot take advantage of any subsequent decline in interest rates for variable rate Stafford/Direct Loans. Thus, if at the next interest rate adjustment on July, rates are slated to drop below the rates currently in effect, the rate on your Consolidation loan will remain unchanged. Of course, if interest rates rise above current levels and you did not consolidate before July 1, you will have lost the opportunity to “lock in” today’s low rates.
Convenience
You can consolidate your separate federal loan payments into one monthly payment. Many borrowers believe this greatly facilitates the student loan repayment process.
Non-federal loans, such as University loans or private alternative loans cannot be included in a Consolidation loan. Federal Perkins and Health and Human Services (HHS) loans* have a 5% fixed rate interest and generally have more generous deferment options than Stafford/Direct Loans. You also lose your in-school interest subsidy, so if you were thinking about returning to school, you would definitely not want to include these in a Consolidation loan. Regarding the interest rate, some borrowers believe the convenience of a single payment outweighs the slightly lower interest rate on certain loans.
*HHS loans include Primary Care Loan (PCL), and Loans for Disadvantaged Students (LDS)
Borrower Benefits
Some of the consolidation lenders/servicers offer a 1-2% discount on your loan once you make a certain number of payments “on time,” usually within 10 or 15 days of the due date. Most also offer a reduction in interest if you agree to make electronic payments directly from your checking or savings account.
Note: borrower benefits are not included in the loan promissory note and cannot be guaranteed into the future.
Financial Implications
Pros: As shown in the chart below, your monthly repayments can be substantially lower with a Consolidation loan that extends the repayment period beyond the standard 10 years. This, of course, increases your monthly cash flow. However, wWhen you extend the repayment period, your interest payments and thus your total payments will be higher. For example, under the 10-year plan, if you borrowed $80,000, you’ll pay $37,746 in interest. However, if you take 30 years to repay, you’ll pay $92,570 in interest, a difference of $54,924!
You can solve this problem by signing up for a shorter repayment period or by prepaying your loan principal by adding an additional amount to your monthly payment. The latter approach gives you the best of both worlds. You’ll enjoy the benefits of a single monthly payment that is lower than the combined payments on your unconsolidated loans, plus you can prepay some of your principal whenever you have the extra funds to do so. Since you can repay your federal loans at any time (consolidation or otherwise) without penalty, you can control the length of your repayment period and the total amount of interest you pay over the life of your loan.
Repayment Options
Pre-payment
You may pre-pay all or part of your student loans at any time without penalty. If you send money during a grace or deferment period, it is credited to the principal amount owed. Note that any prepayment would decrease your outstanding balance when calculating eligibility for an Economic Hardship Deferment.
Cancellation
Federal Perkins and Stafford loans have a provision for cancellation in the event of death or total disability (if you have a temporary disability, your loans can be deferred). Should you die or become totally disabled, the unpaid balance and any accrued interest on your Federal Stafford and Federal Perkins loans will be canceled.
Variable Interest Rate Charged on All Federal Stafford Loans
All Stafford loans have a variable interest rate. The variable interest rate is set each year on July 1.
Combining Federal Stafford and Federal Direct Loans
If you have both Direct and Stafford loans, you can make separate payments on each, or ask that they be consolidated into one loan program. Unfortunately, you cannot ask that your Direct and Stafford loans be combined; if you want to make only one payment, you will have to request consolidation. You cannot combine these loans because of the private versus federal nature of the two loan programs. You can choose to have your loans consolidated into either the federal Direct Loan program or the federal Family Education loan program, whichever you wish.
Standard Repayment
Your loans are automatically put into what is called standard, or level, repayment. The total amount you owe, including estimated interest, is divided into equal monthly payment installments over a ten-year period (this does not include periods of deferment or forbearance). If you borrow an amount where the minimum monthly payment of $50.00 repays the loans in fewer than 10 years, your loan is paid off in a shorter time. Standard repayment is the minimum time frame, and you pay the least amount of interest to the lender or servicer by choosing this option.
Graduated Repayment
Lenders and servicers must offer a repayment option called graduated repayment. Under this plan, you make lower monthly payments during the beginning of your career, when money is tight, and moderate payment increases during later years.
While graduated repayment might be necessary for some borrowers, you should read all the fine print. The interest you pay increases under this plan. For example, a borrower with an outstanding debt of $5,000 would pay $58.06 a month under the normal repayment plan, and end up paying $1,966.23 in interest during the ten-year repayment period. Under a graduated repayment plan, the monthly payments would be $33.59 for the first two years, with average increases of about $20 every two years for the next six years. During the final two years, the monthly repayment would be just over $100. Total interest paid: $2,510.96--over $500 in extra interest!
Extended Repayment Plan
If you need long-term lower payments, you might consider an extended plan. It lets you stretch your repayment over a period of 12 to 30 years, depending on your loan amount. Your fixed monthly payment is usually lower than it would be under the standard plan, but you'll pay more interest because the repayment period is longer.
The federal government and many other lenders allow you to combine an extended plan with graduated payments, which will lower your payments even further -- and increase your overall costs even more.
Postponing Repayment
If your loan payments are enormous or you've fallen on hard times, even the most flexible payment plan might not make ends meet. In many circumstances, it's possible to temporarily postpone making your loan payments or reduce the amount of your payments. These periods of relief are known as deferments (during which the government pays your interest) and forbearances (during which the amount you owe keeps going up because interest isn't paid).
Don't wait until you're already in default because of missed payments -- if you do, your options will be greatly reduced. At the first sign of trouble, call your loan holder and explain that it's impossible for you to make your monthly payments; you can explore your options for deferment or forbearance with the loan holder's represenative.
Income Continget/Sensitive Repayment
If your income is low or unstable, an "income-contingetn" or "income-sensitive repayment" plan may be right for you. As your income rises or falls, so do your monthly payments.
The amount of your payment is refigured every year, based on your annual income, household size, and loan amount. If you are married and file a joint federal tax return, under current rules your joint income is used to calculate the required monthly payment.
Federal Direct Student Loans.If you have a federal direct Stafford or consolidation loan, you can choose an income-contingent repayment plan. PLUS loans are not eligible. The amount you pay annually will vary, but it will never exceed 20% of your discretionary income -- that is, your annual gross income less an amount based on the poverty level for your household size. (To learn what your maximum payment will be, call the direct loan servicing center at 800-848-0979 or use the online calculator at www.ed.gov/DirectLoan/calc.html.)If your income is very low, you may not be required to pay anything under and income continget plan -- or the amount you pay each month may be less than the amount of interest that is accumulating. This may feel like a relief, but as time goes on, your loan balance will continue to grow.The only relief comes after 25 years -- if you haven't paid off the loan by then (not including periods of deferment or forbearance), the government will forgive the rest of what you owe. Even then there's a bit of a catch: The IRS will require you to report the amount forgiven and pay taxes on it unless you can prove that you are insolvent.
Federal Loans from Financial Institutions.If you obtained a federal Stafford, PLUS, HEAL, or consolidation loan from a financial institution, your lender or other loan holder probably offers an income-sensitive plan. Such plans are simlar to the governments's income-contingent plan, with a few important differences: There is no provision for loan forgiveness as there is under the government's plan, and because monthly payments must cover at least the accruing interest, the payments will never be as low as those under income-contingent plan. Also, your monthly payments may be slightly higher, because you must pay your loans in full.
You may pre-pay all or part of your student loans at any time without penalty. If you send money during a grace or deferment period, it is credited to the principal amount owed. Note that any prepayment would decrease your outstanding balance when calculating eligibility for an Economic Hardship Deferment.
Cancellation
Federal Perkins and Stafford loans have a provision for cancellation in the event of death or total disability (if you have a temporary disability, your loans can be deferred). Should you die or become totally disabled, the unpaid balance and any accrued interest on your Federal Stafford and Federal Perkins loans will be canceled.
Variable Interest Rate Charged on All Federal Stafford Loans
All Stafford loans have a variable interest rate. The variable interest rate is set each year on July 1.
Combining Federal Stafford and Federal Direct Loans
If you have both Direct and Stafford loans, you can make separate payments on each, or ask that they be consolidated into one loan program. Unfortunately, you cannot ask that your Direct and Stafford loans be combined; if you want to make only one payment, you will have to request consolidation. You cannot combine these loans because of the private versus federal nature of the two loan programs. You can choose to have your loans consolidated into either the federal Direct Loan program or the federal Family Education loan program, whichever you wish.
Standard Repayment
Your loans are automatically put into what is called standard, or level, repayment. The total amount you owe, including estimated interest, is divided into equal monthly payment installments over a ten-year period (this does not include periods of deferment or forbearance). If you borrow an amount where the minimum monthly payment of $50.00 repays the loans in fewer than 10 years, your loan is paid off in a shorter time. Standard repayment is the minimum time frame, and you pay the least amount of interest to the lender or servicer by choosing this option.
Graduated Repayment
Lenders and servicers must offer a repayment option called graduated repayment. Under this plan, you make lower monthly payments during the beginning of your career, when money is tight, and moderate payment increases during later years.
While graduated repayment might be necessary for some borrowers, you should read all the fine print. The interest you pay increases under this plan. For example, a borrower with an outstanding debt of $5,000 would pay $58.06 a month under the normal repayment plan, and end up paying $1,966.23 in interest during the ten-year repayment period. Under a graduated repayment plan, the monthly payments would be $33.59 for the first two years, with average increases of about $20 every two years for the next six years. During the final two years, the monthly repayment would be just over $100. Total interest paid: $2,510.96--over $500 in extra interest!
Extended Repayment Plan
If you need long-term lower payments, you might consider an extended plan. It lets you stretch your repayment over a period of 12 to 30 years, depending on your loan amount. Your fixed monthly payment is usually lower than it would be under the standard plan, but you'll pay more interest because the repayment period is longer.
The federal government and many other lenders allow you to combine an extended plan with graduated payments, which will lower your payments even further -- and increase your overall costs even more.
Postponing Repayment
If your loan payments are enormous or you've fallen on hard times, even the most flexible payment plan might not make ends meet. In many circumstances, it's possible to temporarily postpone making your loan payments or reduce the amount of your payments. These periods of relief are known as deferments (during which the government pays your interest) and forbearances (during which the amount you owe keeps going up because interest isn't paid).
Don't wait until you're already in default because of missed payments -- if you do, your options will be greatly reduced. At the first sign of trouble, call your loan holder and explain that it's impossible for you to make your monthly payments; you can explore your options for deferment or forbearance with the loan holder's represenative.
Income Continget/Sensitive Repayment
If your income is low or unstable, an "income-contingetn" or "income-sensitive repayment" plan may be right for you. As your income rises or falls, so do your monthly payments.
The amount of your payment is refigured every year, based on your annual income, household size, and loan amount. If you are married and file a joint federal tax return, under current rules your joint income is used to calculate the required monthly payment.
Federal Direct Student Loans.If you have a federal direct Stafford or consolidation loan, you can choose an income-contingent repayment plan. PLUS loans are not eligible. The amount you pay annually will vary, but it will never exceed 20% of your discretionary income -- that is, your annual gross income less an amount based on the poverty level for your household size. (To learn what your maximum payment will be, call the direct loan servicing center at 800-848-0979 or use the online calculator at www.ed.gov/DirectLoan/calc.html.)If your income is very low, you may not be required to pay anything under and income continget plan -- or the amount you pay each month may be less than the amount of interest that is accumulating. This may feel like a relief, but as time goes on, your loan balance will continue to grow.The only relief comes after 25 years -- if you haven't paid off the loan by then (not including periods of deferment or forbearance), the government will forgive the rest of what you owe. Even then there's a bit of a catch: The IRS will require you to report the amount forgiven and pay taxes on it unless you can prove that you are insolvent.
Federal Loans from Financial Institutions.If you obtained a federal Stafford, PLUS, HEAL, or consolidation loan from a financial institution, your lender or other loan holder probably offers an income-sensitive plan. Such plans are simlar to the governments's income-contingent plan, with a few important differences: There is no provision for loan forgiveness as there is under the government's plan, and because monthly payments must cover at least the accruing interest, the payments will never be as low as those under income-contingent plan. Also, your monthly payments may be slightly higher, because you must pay your loans in full.
Mandatory Forbearances
A Mandatory Forbearance resembles a deferment, in that your lender must grant it to you if you request it and if you qualify. It resembles a forbearance in that you are responsible for interest on your loans during the mandatory forbearance period, even if interest was paid by the government during your in-school period. As in any forbearance period, you may continue to make monthly payments to cover interest, or added to the principal balance of your loan(s). This means that you will pay interest on a higher balance when you resume payments, possibly causing your monthly payment amount to go up.
A mandatory forbearance may be granted for the following reasons:
Internship or ResidencyIf you are a medical intern or resident and you either do not qualify for an internship residency deferment (i.e., the earliest of your outstanding loans was borrowed after 6/30/1993), or you have exhausted your deferment eligibility, you may qualify for mandatory forbearance. To qualify you must be engaged in a program that:
Must be successfuly completed before you may begin professional practice or service, or
Leads to a degree or certificate awarded by an institution of higher education, a hospital, or health care facility offering postgraduate training. The mandatory forbearance for internship/residency is available as long as you continue to meet eligibility criteria.
Debt Exceeds Monthly IncomeThe lender must grant a forbearance in yearly increments for up to three years, if you are obligated to make payments on Title IV loans (i.e., FFELP, Federal Direct Loans, and Federal Perkins Loans) and the total of monthly payments is20% ormore of your total monthly income.
National Service, Loan Forgiveness, or Department of Defense RepaymentThe lender must grant a forbearance in yearly increments for any period during which you:
Serve in a national service position for you receive a national service educational award under the National and Community Service Trust Act of 1993 (AmeriCorps); or
Maintain eligibility for loan forgiveness under the Stafford Loan Forgiveness Demonstration Program (if the program is funded) for performing the required type of service; or
Perform service that would qualify the borrower for partial loan repayment under the Student Loan Repayment Programs administered by the U.S. Department of Defense.
Forbearance
If you have problems that affect your ability to meet your scheduled loan repayments, your lender might grant forbearance. During forbearance, payments are postponed (or in some cases just reduced) due to financial hardship. Interest accrues during this period and is added to the amount you already owe.
To request any type of forbearance, contact your loan holder. If you make the initial contact by telephone, be sure to follow up in writing. Do not assume forbearance has been approved until you receive written confirmation from the lender.
Forbearance During Delinquency
If your loans become delinquent due to non-payment, you will have to “bring them current” before any deferment can be allowed. In many cases, your lender or servicer will grant a forbearance for the time period between the payment due date and the date your loans can enter a deferment status. Any time forbearance is granted, remember that interest accrues on the loans, making them more expensive. Forbearance is not granted automatically, and must be specifically requested.
A mandatory forbearance may be granted for the following reasons:
Internship or ResidencyIf you are a medical intern or resident and you either do not qualify for an internship residency deferment (i.e., the earliest of your outstanding loans was borrowed after 6/30/1993), or you have exhausted your deferment eligibility, you may qualify for mandatory forbearance. To qualify you must be engaged in a program that:
Must be successfuly completed before you may begin professional practice or service, or
Leads to a degree or certificate awarded by an institution of higher education, a hospital, or health care facility offering postgraduate training. The mandatory forbearance for internship/residency is available as long as you continue to meet eligibility criteria.
Debt Exceeds Monthly IncomeThe lender must grant a forbearance in yearly increments for up to three years, if you are obligated to make payments on Title IV loans (i.e., FFELP, Federal Direct Loans, and Federal Perkins Loans) and the total of monthly payments is20% ormore of your total monthly income.
National Service, Loan Forgiveness, or Department of Defense RepaymentThe lender must grant a forbearance in yearly increments for any period during which you:
Serve in a national service position for you receive a national service educational award under the National and Community Service Trust Act of 1993 (AmeriCorps); or
Maintain eligibility for loan forgiveness under the Stafford Loan Forgiveness Demonstration Program (if the program is funded) for performing the required type of service; or
Perform service that would qualify the borrower for partial loan repayment under the Student Loan Repayment Programs administered by the U.S. Department of Defense.
Forbearance
If you have problems that affect your ability to meet your scheduled loan repayments, your lender might grant forbearance. During forbearance, payments are postponed (or in some cases just reduced) due to financial hardship. Interest accrues during this period and is added to the amount you already owe.
To request any type of forbearance, contact your loan holder. If you make the initial contact by telephone, be sure to follow up in writing. Do not assume forbearance has been approved until you receive written confirmation from the lender.
Forbearance During Delinquency
If your loans become delinquent due to non-payment, you will have to “bring them current” before any deferment can be allowed. In many cases, your lender or servicer will grant a forbearance for the time period between the payment due date and the date your loans can enter a deferment status. Any time forbearance is granted, remember that interest accrues on the loans, making them more expensive. Forbearance is not granted automatically, and must be specifically requested.
Delaying the Inevitable - Grace Period
Many student loans provide a "grace period" immediately following graduation. This is a time when payments are not required and, in many cases, interest does not accrue. The grace period must be used before you can obtain deferments. Some loan programs provide another grace period, lasting six months, after periods of approved deferment. The Unsubsidized Federal Stafford Loan charges interest during the six-month allowable grace period. The HEAL and alternative loans also charge interest during grace. We provide a chart that has grace period information for the various federal student loan programs.
If you took a leave of absence from your undergraduate education or interrupted your medical school studies (for research, illness, etc.), your loans were placed in grace at that time. Whether or not you receive another grace period upon graduation from medical school depends on the length of time you are away from undergraduate or medical school and the policies of the individual loan programs. The status of your grace period (or lack thereof) is vitally important since it usually affects when your deferment period begins and, ultimately, when actual loan repayment begins. Information on grace periods follows.
Federal Perkins Loans
Grace period is six or nine months (check your promissory note). Borrowers also receive a six-month grace period after periods of eligible deferment.
National Direct Student Loans
Grace period is six months. Borrowers also receive a six-month grace period after periods of eligible deferment.
University of California Loans
Grace period is six months. Borrowers also receive a six-month grace period after periods of eligible deferment.
Health Professions Student Loans/ Primary Care Loans
Grace period is twelve months. Those who return to school after the grace period has ended do not receive an additional grace period and must begin immediate repayment.
Federal Stafford Student Loans
Grace period is six months. Those who return to school after the grace period has ended do not receive an additional grace period (except for loans made before 10/1/81).
Unsubsidized Federal Stafford Student Loans
Grace period is six months. Those who return to school after the grace period has ended do not receive an additional grace period.
Supplemental Loans for Students (SLS)
There is no grace period. Repayment begins 60 days after the loan is disbursed unless you obtained a student deferment. You must begin loan repayment as soon as you leave school. If you have Federal Stafford Loans in addition to SLS Loans, you can ask for a six-month forbearance so that your Federal Stafford Loan and SLS Loans enter repayment at the same time. Interest will accrue during this period.
Health Education Assistance Loans (HEAL)
Grace period is nine months. Students may sometimes receive another grace period after a deferment period--check with your lender.
Alternative Loan Program
For programs such as Medloans ALP, MedCap MAL, and/or MedAchiever loans, etc) see deferment section.
If you took a leave of absence from your undergraduate education or interrupted your medical school studies (for research, illness, etc.), your loans were placed in grace at that time. Whether or not you receive another grace period upon graduation from medical school depends on the length of time you are away from undergraduate or medical school and the policies of the individual loan programs. The status of your grace period (or lack thereof) is vitally important since it usually affects when your deferment period begins and, ultimately, when actual loan repayment begins. Information on grace periods follows.
Federal Perkins Loans
Grace period is six or nine months (check your promissory note). Borrowers also receive a six-month grace period after periods of eligible deferment.
National Direct Student Loans
Grace period is six months. Borrowers also receive a six-month grace period after periods of eligible deferment.
University of California Loans
Grace period is six months. Borrowers also receive a six-month grace period after periods of eligible deferment.
Health Professions Student Loans/ Primary Care Loans
Grace period is twelve months. Those who return to school after the grace period has ended do not receive an additional grace period and must begin immediate repayment.
Federal Stafford Student Loans
Grace period is six months. Those who return to school after the grace period has ended do not receive an additional grace period (except for loans made before 10/1/81).
Unsubsidized Federal Stafford Student Loans
Grace period is six months. Those who return to school after the grace period has ended do not receive an additional grace period.
Supplemental Loans for Students (SLS)
There is no grace period. Repayment begins 60 days after the loan is disbursed unless you obtained a student deferment. You must begin loan repayment as soon as you leave school. If you have Federal Stafford Loans in addition to SLS Loans, you can ask for a six-month forbearance so that your Federal Stafford Loan and SLS Loans enter repayment at the same time. Interest will accrue during this period.
Health Education Assistance Loans (HEAL)
Grace period is nine months. Students may sometimes receive another grace period after a deferment period--check with your lender.
Alternative Loan Program
For programs such as Medloans ALP, MedCap MAL, and/or MedAchiever loans, etc) see deferment section.
Tracking Your Loans
NSLDS
The National Student Loan Data System (NSLDS) is the U.S. Department of Education's central database for student aid. It receives data from schools, agencies that guarantee loans, the Direct Loan program, the Pell Grant program, and other U.S. Department of Education programs. NSLDS provides a centralized, integrated view of Title IV loans and Pell Grants that are tracked through their entire cycle; from aid approval through closure.
You can use the web site to make inquiries about your Title IV loans and/or Pell Grants. The site displays information on loan and/or grant amounts, outstanding balances, loan statuses, and disbursements. more...
The National Student Loan Data System (NSLDS) is the U.S. Department of Education's central database for student aid. It receives data from schools, agencies that guarantee loans, the Direct Loan program, the Pell Grant program, and other U.S. Department of Education programs. NSLDS provides a centralized, integrated view of Title IV loans and Pell Grants that are tracked through their entire cycle; from aid approval through closure.
You can use the web site to make inquiries about your Title IV loans and/or Pell Grants. The site displays information on loan and/or grant amounts, outstanding balances, loan statuses, and disbursements. more...
Wells Fargo Primeloan for Physicians
Wells Fargo Bank offers a PrimeLoan for Physicians, which is available to doctors who are starting their own medical practice.
Interest Rate Interest depends upon the amount borrowed, as follows:
$0 - $49,999 10% Fixed Rate$50,000 - $100,000 8.75% Fixed Rate
Loan Fee 1% of the loan amount.
Repayment Interest-only payments during the first year and graduated paymentsuntil the loan is repaid at the end of year six.
Contact For additional information, line of credit, and other lines of loans as well, contact :Wells Fargo Bank
Interest Rate Interest depends upon the amount borrowed, as follows:
$0 - $49,999 10% Fixed Rate$50,000 - $100,000 8.75% Fixed Rate
Loan Fee 1% of the loan amount.
Repayment Interest-only payments during the first year and graduated paymentsuntil the loan is repaid at the end of year six.
Contact For additional information, line of credit, and other lines of loans as well, contact :Wells Fargo Bank
National Association of Doctors
Loans are available to doctors in training as follows:
Aggreagate Loan amounts:1st. year - $20,0002nd year - $25,0003rd. year - $30,0004th. year & above - $35,000In Practice - $50,000
Interest Rate Introductory rate for all loans until August 2002 4.99%Thereafter, interest depends upon the amount borrowed, as follows:$0 - $9,999 Prime Rate + 7.99%$10,000 - $30,000 Prime Rate + 4.99%$30,001 & Over Prime Rate + 3.99%(Prime rate is based on Wall Street Journal rates. Current Prime Rate is 4.75% until 03/31/02)
Repayment Borrower can pay 1.5% of the total balance. For example; minimum monthly payment on a $10,000 loan is $150.
Contact National Association of Doctors180 E. Main Street, Suite 203Smithtown, NY 11787-28111-800-237-0270
P.L.A.T.O. Graduate Student Loan
Medical residents can borrow from $1,000 to $20,000 annually from the P.L.A.T.O. Graduate Student Loan, with an aggregate limit of $80,000. Eligibility for this loan is based on the resident’s debt-to-income ratio and credit report. Residents can also have a cosigner for this loan. Residents can apply by phone or on-line, and be pre-approved for the loan within five minutes.
Interest Rate First six months Prime Rate + 0%
Thereafter, based upon borrower’s/co-borrower’s credit history at time of application. Borrower is notified at time of application.Prime Rate + 0% to Prime Rate + 8.9%(Prime rate is based on Wall Street Journal rates. Current Prime Rate is 4.75% until 03/31/02.)
Loan Fee 0% - 8.99% origination fee, based on borrower’s/co-borrower’s credit history. Amount is added to the principal.
Repayment Begins immediately after loan is received. Up to 20 years to repay.
A 2% reduction in interest rate is available to borrowers once they have made 36 months on-time payments of the exact amount billed. Interest rate cannot be reduced below the Prime Rate.
Contact P.L.A.T.O.Education Finance21660 Ridgetop CircleSterling, VA 201661-800-GO-PLATO (467-5286)http://www.plato.org
Aggreagate Loan amounts:1st. year - $20,0002nd year - $25,0003rd. year - $30,0004th. year & above - $35,000In Practice - $50,000
Interest Rate Introductory rate for all loans until August 2002 4.99%Thereafter, interest depends upon the amount borrowed, as follows:$0 - $9,999 Prime Rate + 7.99%$10,000 - $30,000 Prime Rate + 4.99%$30,001 & Over Prime Rate + 3.99%(Prime rate is based on Wall Street Journal rates. Current Prime Rate is 4.75% until 03/31/02)
Repayment Borrower can pay 1.5% of the total balance. For example; minimum monthly payment on a $10,000 loan is $150.
Contact National Association of Doctors180 E. Main Street, Suite 203Smithtown, NY 11787-28111-800-237-0270
P.L.A.T.O. Graduate Student Loan
Medical residents can borrow from $1,000 to $20,000 annually from the P.L.A.T.O. Graduate Student Loan, with an aggregate limit of $80,000. Eligibility for this loan is based on the resident’s debt-to-income ratio and credit report. Residents can also have a cosigner for this loan. Residents can apply by phone or on-line, and be pre-approved for the loan within five minutes.
Interest Rate First six months Prime Rate + 0%
Thereafter, based upon borrower’s/co-borrower’s credit history at time of application. Borrower is notified at time of application.Prime Rate + 0% to Prime Rate + 8.9%(Prime rate is based on Wall Street Journal rates. Current Prime Rate is 4.75% until 03/31/02.)
Loan Fee 0% - 8.99% origination fee, based on borrower’s/co-borrower’s credit history. Amount is added to the principal.
Repayment Begins immediately after loan is received. Up to 20 years to repay.
A 2% reduction in interest rate is available to borrowers once they have made 36 months on-time payments of the exact amount billed. Interest rate cannot be reduced below the Prime Rate.
Contact P.L.A.T.O.Education Finance21660 Ridgetop CircleSterling, VA 201661-800-GO-PLATO (467-5286)http://www.plato.org
APPA/NARI
Sponsored by the American Professional Practice Association (APPA) and the National Association of Residents and Interns (NARI), this program provides an unsecured line of credit as follows:
1st year - $20,0002nd year - $25,0003rd year - $35,000Final year - $35,000Fellowship - $35,000
Practicing Physicians First three years in practice Up to $40,000In practice three years or longer Up to $50,000
Interest Rates Fixed Rate 13.95%-Or- variable interest rate based on the amount borrowed as follows:$0 - 30,000 Prime Rate + 5.25%$30,001 & Over Prime Rate + 4.25%(Prime rate is based on Wall Street Journal rates. Current Prime Rate is 4.75% until 03/31/02)
Repayment Can pay interest only for the first 24 months and may be renewed through the first year of practice.
Contact APPA/NARI Loan DepartmentHillsboro Executive Center North 350 Fairway Drive, Suite 200Dearfield Beach, FL 33441-18341-800-221-2168, ext. 5FAX: 954-571-8582http://www.nari-assn.com
1st year - $20,0002nd year - $25,0003rd year - $35,000Final year - $35,000Fellowship - $35,000
Practicing Physicians First three years in practice Up to $40,000In practice three years or longer Up to $50,000
Interest Rates Fixed Rate 13.95%-Or- variable interest rate based on the amount borrowed as follows:$0 - 30,000 Prime Rate + 5.25%$30,001 & Over Prime Rate + 4.25%(Prime rate is based on Wall Street Journal rates. Current Prime Rate is 4.75% until 03/31/02)
Repayment Can pay interest only for the first 24 months and may be renewed through the first year of practice.
Contact APPA/NARI Loan DepartmentHillsboro Executive Center North 350 Fairway Drive, Suite 200Dearfield Beach, FL 33441-18341-800-221-2168, ext. 5FAX: 954-571-8582http://www.nari-assn.com
Loans Available to House Staff
Outside Loans for Residents
Several other loans are available from outside organizations. Since they charge high interest we recommend that you use extreme caution in taking out these loans, particularly if you borrowed significant amounts as a medical student. Interest begins to accrue as soon as the loan is granted; principal payments can sometimes be deferred. Applications can be obtained directly from the organization.
Several other loans are available from outside organizations. Since they charge high interest we recommend that you use extreme caution in taking out these loans, particularly if you borrowed significant amounts as a medical student. Interest begins to accrue as soon as the loan is granted; principal payments can sometimes be deferred. Applications can be obtained directly from the organization.
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