Frequently Asked Questions
Click below on your category of interest to read questions and answers relating to that student loan topic.
Categories:
Financial Aid
Q. Where do I start?
A. The financial aid process is a little different for each student, but there are a few things that are the same for just about everyone. The first step is to complete a Free Application for Federal Student Aid (FAFSA).The types of aid you may qualify for is determined by completing the FAFSA.
Q. I probably won’t qualify for any aid. Do I still need to complete the FAFSA?
A. Yes. Many families mistakenly think they won't qualify for aid so they don’t want to complete the FAFSA process. There are a few sources of aid such as Unsubsidized Stafford and Parent Loan for Undergraduate Students (PLUS) loans that are available regardless of need. In addition to determining eligibility for Federal Student Aid programs, the FAFSA is used to determine eligibility for many private grant and scholarship programs. Since the process is free, there is no downside to completing the FAFSA.
Q. Do I have to reapply for financial aid every year?
A . Yes. Federal financial aid is awarded on an annual basis so you must apply every year. After your first year, you will receive a reminder to complete a renewal FAFSA. If you are completing your application online, you can choose to have information pre-filled. By choosing to have your FAFSA pre-filled, most of the answers you provided last year will be displayed. You will need to review the pre-filled answers and update any data that has changed and answer any questions that did not pre-fill. If your financial circumstances, household size, or number of family members in college have changed, you may get more or less aid.
Q. How soon after January 1 should the FAFSA form be sent in?
A. You should complete your FAFSA as soon after January 1 as possible. The priority deadline in North Dakota is March 15. If you meet this date you may receive more financial aid. Visit the FAFSA Web site to find deadlines for other states.
Q. Can I submit my FAFSA before my taxes are complete?
A. You will need some information from your taxes to complete the FAFSA. Although it is better to do your taxes early, if necessary, it is okay to use prior years’ taxes or an estimate of your income, so long as this information is close to actual values. You will have an opportunity to enter actual information once your taxes are complete.
Q. Are there any tips to help me complete the FAFSA?
| A. Yes, see below: |
- Apply online using www.fafsa.ed.gov. Before you begin completing the FAFSA online, you should print the FAFSA worksheet so you can preview the questions you will be asked to complete.
- Check deadlines. Be aware of your state's and your school's application deadlines. While there is no deadline for applying for federal student aid, you should apply as early as possible after January 1 of each year that you will attend college. Some state and school aid is awarded on a first-come, first-served basis.
- Collect the information you need to complete the FAFSA:
- Your Social Security Number and your parents' Social Security Numbers
- Your driver's license number if you have one
- Your alien registration number if you are not a U.S. citizen
- Your federal tax returns and income information
- Check your FAFSA. After you complete the FAFSA, you will receive a Student Aid Report (SAR). Review the information carefully and make any necessary corrections.
- Respond immediately to any request from your school for additional information.
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Student Loans
Q. What kinds of loans are available?
A. BND offers both federal and alternative student loans. These include loans for Undergraduate Students, Loans for Graduate Students, Loans for Parents, and Loans for High School Students taking Advanced Placement classes.
Q. What is the difference between a Federal Stafford Subsidized Loan and an Unsubsidized Loan?
A. Subsidized means the government pays the interest that accrues on your loan while you are in school, for the first six months after you leave school and if you qualify to have your payments deferred. The government approves subsidized loans based on financial need.
Unsubsidized means you are responsible for paying all interest that accrues. You can receive both subsidized and unsubsidized loans for the same enrollment period as long as you don't exceed the annual loan limits.
Q. What is a DEAL loan?
A. The DEAL is an alternative loan offered exclusively by BND and guaranteed by Student Loans of North Dakota.
Q. Should I apply for a federal loan (Stafford Subsidized, Stafford Unsubsidized, or Parent PLUS) or an alternative loan?
| A. Students should discuss all of the financing options that are available to them with their Financial Aid Office. BND strongly encourages students to maximize scholarships, grants, and Federal Family Education Loan Program (FFELP) loans such as Stafford loans before applying for a DEAL loan for the following reasons: |
- FFELP loans are guaranteed by the U.S. Department of Education (DOE).
- FFELP loans are not credit based (with the exception of the PLUS and Grad PLUS).
- FFELP loans generally have a lower rate of interest and may qualify to have the interest paid by the DOE while the student is attending school, during their grace period and during periods of deferment.
- FFELP loans offer repayment choices and forgiveness options that DEAL loans do not provide.
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Q. Can I apply for a DEAL loan if I did not complete the Free Application for Federal Student Aid (FAFSA)?
A. No. The only exception to this requirement is if you are attending school less than half-time. Everyone else must complete the FAFSA in order to identify other forms of financial aid that may be a better option for you.
Q. Does BND offer online loan applications?
A. Yes. We have online loan applications for Stafford, PLUS, Grad PLUS and DEAL loans. Certain colleges prefer that you begin the Stafford loan process at the school. If the school you are attending prefers this method, we will notify you to contact them directly.
Q. Can I go online to check the status of my application after I submit it?
A. Yes. Log in to our secure Web site at “Manage My Account” to see the status of your loan application and find out when your loan will be disbursed.
Q. If I prefer to complete a paper loan application, may I fax that to BND?
A. No. You must mail the original version of the completed application to our office.
Q. How will I get the money?
A. Typically, the money is sent directly to your school in at least two installments. It may be:
- Electronically transferred to your school, or
- Issued as a check made payable to you and mailed to the school
Your loan must be used to pay for tuition, fees, room and board, and other school charges. Any remaining funds will be distributed to you by the school.
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Repayment
Q. What is capitalization?
During a forbearance or deferment period, interest continues to accrue. Any unpaid interest is capitalized (added to the principal balance) at the end of the forbearance or deferment period. Once interest is capitalized, interest accrues on the new principal loan balance.
Below is an example of the effect of capitalization. These examples are based on a 12-month forbearance period. In Example 1, interest is paid during the forbearance period. In Example 2, interest is not paid and is capitalized at the end of the forbearance period.
Effect of Capitalization
| |
Example 1:
Interest Paid During Forbearance |
Example 2:
Interest is Not Paid and Capitalized |
| Principal amount |
$10,000.00 |
$10,000.00 |
| Interest rate |
6.80% |
6.80% |
| Interest that accrues during the forbearance period |
$680.00 |
$680.00 |
| Interest paid during the forbearance period |
$680.00 |
$0.00 |
| Interest capitalized at the end of the forbearance period |
$0.00 |
$680.00 |
| Principal balance after the forbearance period |
$10,000.00 |
$10,680.00 |
| Monthly payment |
$115.08 |
$122.91 |
| Interest paid over the life of the loan |
$3,809.60 |
$4,069.20 |
| Total principal and interest paid over the life of the loan |
$13,809.60 |
$14,749.20 |
Q. When do I start repayment?
A. Repayment of your Federal Stafford loans (Subsidized and Unsubsidized) and your DEAL loans begin when your grace period expires. You will receive a one-time grace period which begins when you drop below a half-time enrollment status and lasts for six months. The first payment is due after the grace period ends. Be aware that for a Stafford Unsubsidized loan or a DEAL loan, interest accrues while you are attending school and during your six-month grace period. Any unpaid accrued interest is capitalized (added to your principal balance) when the loan enters repayment.
DEAL loans (for less than half-time attendance) enter repayment when the loan is fully disbursed.
PLUS loans enter repayment when the loan is fully disbursed, but you may be eligible to defer payments and then postpone repayment an additional six months after your dependent student ceases at least half-time enrollment.
Q. Is information about my loans reported to the credit bureau(s), also known as consumer reporting agencies?
A. Yes. Every month, since your loan was disbursed, we have reported the status of your loans to the credit bureau(s). BND will continue to report information about your payment history to the credit bureau(s) each month until your loan is paid in full.
Q. May I make payments on a loan while in school?
A. Yes. Although not required, BND encourages you to make payments while you are in school if you are able. Payments received will first be applied to unsubsidized accrued interest, if any, then to your principal balance.
Q. Do I have to send in a check or are there other ways for me to make my monthly payment?
A. BND offers you several options for making your monthly payment. You may even be able to reduce the interest rate of your loan. Learn more about ways to make your payment.
Q How are payments applied?
A. Payments are applied in this order:
- Accrued interest
- Late charges or collection fees
- Principal
Unless you notify us differently, additional payment amounts equal to or greater than your monthly payment amount will be applied to advance the next scheduled due date.
Q. How does interest accrue on my student loan(s)?
A. Interest accrues daily on the unpaid principal balance of your loan. We use a simple daily interest calculation to determine accrued interest for each day: Interest rate X current principal balance ÷ number of days in the year = the amount of interest that accrues on your loan each day.
Q. Are there any special options available to people serving in the military?
A. Yes. Military deferment options and an interest rate reduction may be available. BND will reduce the interest rate to 6% on any eligible student loan. The reduction lasts as long as you are on active duty, provided the loan was obtained prior to the date that active duty began. In order to take advantage of this benefit, you must give written notice to BND requesting the reduction and send copies of your military orders. This notice must be given no later than 180 days after you leave active duty. For federal student loans, the 6% interest reduction only applies to borrowers in military service as of August 14, 2008. According to the Department of Education, borrowers may not receive a refund of interest paid in excess of the 6% limit before August 14, 2008. Contact BND for additional information on these benefits.
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Delinquency
Q. What should I do if I can't make my payments?
A. Contact BND at 800-472-2166 ext. 5660. Many different options are available to assist you if you are having difficulty repaying your loan. These options include:
- Forbearance
- Deferment
- A different repayment plan – extended repayment, graduated repayment, income-sensitive repayment, income-based repayment
You should contact BND to find out which option would be best for you.
Q. What is a forbearance?
A. A forbearance allows you to make a smaller monthly payment or to temporarily postpone repayment by choosing a no payment option. Be careful – the loan balance can increase very quickly if you use a no payment forbearance option!
Q. What is a deferment?
A. A deferment allows you to postpone repayment of your loans when you meet specific eligibility criteria defined by the Department of Education (DOE). Interest on subsidized loans is paid by DOE during eligible deferment periods. Interest that accrues on unsubsidized loans is your responsibility and any interest that is not paid will be added to your loan balance when your deferment ends.
Q. What happens if I am late in making my loan payment?
A. If you are more than 15 days late, you will be assessed a late charge. If the delinquency continues and your loan becomes 30 days late, BND will report your late payment(s) to the credit bureaus (also known as consumer reporting agencies). If the delinquency continues for 270 days, you will default.
Q. What are the consequences if I default on my student loan?
| A. Defaulting on your student loan has very serious consequences. If you default, the Guarantor of your loan will purchase your loan from BND. The Guarantor will initiate collection activity against you until the loan has been repaid in full. Defaulting may result in any or all of the following: |
- Report of the default to all national credit bureaus (aka consumer reporting agencies). Adverse credit reports can affect your ability to obtain financing and can increase the cost of credit if you are approved.
- Report of default to the Internal Revenue Service, causing federal tax refunds to be withheld and applied to the loan balance (this is also true for state tax refunds).
- Loss of other federal or state payments.
- Garnishment of wages.
- Assignment of loan to a collection agency.
- Possible charge of up to 25% of your principal balance in collection costs necessary to collect the debt.
- Loss of eligibility for further assistance from any Title IV Program and for DEAL loans.
- Loss of eligibility for repayment options, deferments and interest benefits as described on the promissory note.
- Suspension of professional licenses in North Dakota.
- Lawsuit.
- Liability for court/legal expenses.
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