# FAQ

## We answer all your loan questions.

### Q: How much should I borrow to cover this year's expenses?

A? We encourage students and parents to borrow only what they need and are comfortable with repaying in the long run. Determine your estimated expensesand subtract any grants, scholarships or other resources such as savings or earnings from work. The difference is the amount you may need to borrow in a student and/or parent loan. As you are borrowing funds each year, be conscious of your total loan debt in relation to your future payment obligation and reevaluate every time you borrow.

### Q: How do I determine which is the best loan to borrow?

A: When making the decision to borrow a particular type of loan, consider the following questions:

• What is the maximum and minimum I can borrow in this program?
• Who is responsible for paying the interest while the student is enrolled in school?
• What is the interest rate?
• If the interest is the responsibility of the borrower, does the interest need to be paid quarterly, yearly, at graduation?
• How much is the interest payment?
• When does the borrower need to begin repaying the principal balance of the loan?
• What is the minimum monthly payment?
• How long can I repay the loan?
• Can I make payments on the loan before it is due and/or pay the amount off earlier without penalty?
• What are the choices if my income changes when I'm repaying the loan?

### Q: How much total should I borrow?

A: As you are borrowing funds each year, be conscious of your total loan debt in relation to your future payment obligation. Take into consideration your current need for funds, projected future earnings, and how much you will need to live when you graduate. Then estimate your anticipated level of debt in relation to the monthly payment obligation. Remember, failure to make payments on time may affect your credit rating and ability to borrow for other purposes. Reevaluate your future expenses each time you borrow funds.

### Q: What is interest?

A: Interest is an amount charged to the borrower for the privilege of using the lender's money. Interest is calculated as a percentage of the principal balance of the loan. The percentage rate may be fixed for the life of the loan, or it may be variable, depending on the terms of the loan.

### Q: Should I consolidate my loans?

A: Consolidation is a good way to manage your loan debt repayment. By bringing all your federal loans together into one payment amount, you will more easily manage your monthly loan repayment and may reduce your monthly payments. Consolidation loans currently are based on a fixed interest rate whereas individual loans may have a variable interest rate that may or may not be capped at a maximum interest rate. There are some drawbacks so students must carefully review all information from the lender.

### Q: What are my responsibilities as a borrower once I am no longer enrolled in school?

A: For Federal Subsidized, Unsubsidized and Federal Perkins loan borrowers, you must complete an exit counseling session so you are aware of all the information you will need to know about repaying your loan. Make your monthly payments on time, even if you are not billed. Stay in contact with the servicer of your loan at all times. Notify them immediately of your address, name change, enrollment change, and/or if you are having difficulty making payments. Open correspondence and return phone calls immediately.

### Q: What if I am having trouble repaying my loan?

A: If you have extenuating circumstances or know you will be unable to make your monthly payment, communicate with the servicer of your loan immediately. Avoid the costs and consequences of delinquency (late payments) and default (no payments). Under certain conditions, you may be eligible for a forbearance, a deferment or cancellation.

### Q: What is capitalized interest?

A: When interest on your loans continues to accumulate and is not paid, the accrued interest will be capitalized - added to the principal. You will then be paying interest on the accrued interest and the disadvantage is you pay more interest over the life of the loan. Interest may be capitalized quarterly, yearly or at graduation.

### Q: What can I do if I am continuing my education and re-enrolling in classes at another school other than Western after my repayment period has begun?

A: Inform your servicer of your plans. The servicer will determine if you are eligible for an "in-school deferment" that allows your payments to be delayed. Once you no longer meet the conditions of the deferment, your repayment period begins immediately.

## Visit related WMU sites

There is a lot more to see! Visit some of our friends at WMU to learn about academics, campus life and how you can be successful.

Student Financial Aid
1903 W Michigan Ave
Western Michigan University
Kalamazoo MI 49008-5337 USA
269 387-6000 finaid-info@wmich.edu