Vermont Student Loans

Girl and father discussing Vermont student loansStudents wishing to attend college in Vermont have a wide range of options, from small liberal arts schools to big universities.

The first institute of higher education to give public support to the freedom of religion and the fifth oldest university in New England, the University of Vermont (UVM) provides its diverse student body with over 100 fields of study to choose from. It is located on the banks of Lake Champlain and in the shadow of the Adirondack and Green mountain ranges in Burlington, Vermont.

The Community College of Vermont (CCV) is the second largest college in the state and may be the most affordable. With campuses in Montpelier, Bennington, Upper Valley, Middlebury, Rutland, St. Johnsbury, Springfield, Morrisville, Brattleboro, St. Albans, Newport, and Winooski, there is bound to be a CCV campus convenient to any Vermonter.

Northfield, Vermont, is home to Norwich University, which is the oldest private military college in the United States. The only technical college in Vermont, the Vermont Technical College, has two campuses, one in Williston and the other in Randolph Center, with small classes enabling each student to reach their full potential.

Top Liberal Arts Colleges in Vermont

One of the oldest liberal arts colleges in the United States, Middlebury College is private institution known for its international and environmental studies and language instruction. Nestled in the Champlain Valley in the central part of the state, Middlebury College in Middlebury, Vermont, teaches its students to think globally.

The first college in the state with two-thirds of its full-time undergraduates being Vermonters, Castleton College in Castleton, Vermont boast a low student-to-teacher ratio, and it is part of the Vermont State College System. Two other public liberal arts colleges are also part of the state system: the Lyndon State College in Lyndonville and Johnson State College in Johnson.

There are numerous small, private liberal arts colleges in Vermont, each with its own unique character and source of pride, including the Catholic St. Michael’s College in Colchester, the not-for-profit Champlain College in Burlington, Bennington College in Bennington which requires its students to gain real-world experience while attending school, Marlboro College in Marlboro which provides a progressive and interdisciplinary approach, and Green Mountain College in Poultney, Vermont, to name a few.

Affording College in Vermont

The estimated cost of attendance at the University of Vermont for the 2015-2016 academic year for a Vermont resident is $31,000, while out-of-state students will pay $53,864 for two full-time semesters. Most students cannot afford to pay the total amount without some form of financial aid. The first step in obtaining financial aid is to seek out any free, or gift, money options that might be available. Many organizations, community groups, and businesses offer scholarships to students based on merit, community service, ethnicity, or for being a member of an association or club. Colleges and universities also offer a variety of scholarships for academics, athletics, or to students studying in a particular field. Scholarships generally each require their own separate application process. The financial aid office at your school will have more information on the scholarships they offer and the application process.Private or community-based scholarships may require a little extra legwork to identify and apply for. The Vermont Student Assistance Corp. (VSAC) is a non-profit agency dedicated to helping students attend and afford college in Vermont and keeps a list of scholarships that Vermont residents (Vermonters) may qualify and apply for.

Other forms of free money that don’t have to be repaid include grants, which can also come from a variety of sources. Federal grants are provided by the U.S. Department of Education and given based on the results of your Free Application for Federal Student Aid (FAFSA), which calculates the gap between your expected family income (EFC) and total cost of attendance (COA) at your chosen school. For federal, state, and campus-based grants, the first step to applying is typically submitting your FAFSA.

Vermont state-based grants also require that you submit the Vermont grant application. You can do so online by creating a myVSAC account, clicking on the grant link, and filling out the required information. Federal grants are open to all eligible students regardless of whether or not they are residents of Vermont, while Vermont-based grants require that students be Vermonters. Federal and state-based grants for Vermont students include:

  • Federal Pell Grant:  This grant awards students up to $5,815 per year based on financial need, COA, full-time or part-time enrollment status, and intention to complete entire school year.
  • Federal Supplemental Educational Opportunity Grant (FSEOG):  This awards funds for students demonstrating extreme financial need and attending a participating school. May award between $100 and $4,000 each year, depending on available funds, financial need, COA, and number of applicants. Awards granted on a first-come, first-served basis and disbursed to schools directly to then award to students, making the FSEOG a campus-based aid program utilizing federal funds.
  • Vermont Incentive Grant:  Vermont resident undergraduate students taking 12 or more credits may be eligible depending on financial need and the COA. Students may not already have a bachelor’s degree unless they are attending the University of Vermont’s School of Medicine or are enrolled in a doctor of veterinary medicine program. Funds are limited and vary annually based on availability. Awards are based on a first-come, first-served basis.
  • Vermont Part-Time Grant:  This grant is the same as the Vermont Incentive Grant except that funding is based on number of credit hours as well as financial need and COA, and it is for students taking fewer than 12 credits.
  • Vermont Non-Degree Grant:  Students taking non-degree courses to further their employment or promote additional study, and who demonstrate financial need, may be eligible for these funds that vary annually and are based on a first-come, first-served basis. Students may receive funds for two enrollment terms each financial year, up to six in a lifetime. To qualify, students must take classes at a Vermont educational institution, an approved postsecondary institution, or an approved school or private institution for the Vermont Non-Degree Grant program.

Certain fields of study may also be eligible for grant funds. The Teacher Education Assistance for College and Higher Education (TEACH) Grant is a federal program providing funding to participating schools to grant to prospective students. Students taking eligible classes and fulfilling a service commitment by teaching in a high-need field and low-income school may receive up to $4,000 a year in grant funds. Failure to meet the service commitment will result in the grant turning into a loan that will need to be repaid.

Another option that your Student Aid Report, or SAR, may indicate that you are eligible for is the Federal Work-Study Program. Eligible students may work in campus-based jobs, or jobs in the nearby community, on a part-time basis making at least minimum wage to help afford college costs. If you qualify, you will still need to apply for these jobs directly through your school’s financial aid office.

Borrowing Money to Pay for College

When all grants, scholarships, and forms of free money have been utilized, there may still be a gap between what a student can afford and the cost of college. Student loans are an option to help close this gap. Federal student loans generally are considered the best option for students, as they offer flexible repayment plans and low and fixed interest rates. There are two federal loan programs: the William D. Ford Direct Loan Program and the Perkins Loan Program. Schools participating in the Perkins Loan program distribute funds directly, making the school your lender instead of the U.S. Department of Education like loans through the Direct Loan Program. Perkins Loans are for undergraduate, professional, and graduate students with extreme financial difficulties, and they have a low and fixed interest rate of 5%. Undergraduate students may borrow up to $5,500 per year, up to a maximum of $27,000 total, while professional and graduate students may borrow $8,000 per year, up to a cap of $60,000 (including undergraduate loan amounts).

Loans in the Direct Loan Program include Subsidized and Unsubsidized Direct Loans, PLUS Loans, and Direct Consolidation Loans. Subsidized Direct Loans are for undergraduate students with financial need, as the interest is covered by the federal government. Unsubsidized Direct Loans do not require students to have financial need to qualify. Your school will determine how much you can borrow through a federal Direct Loan based on the COA minus any other financial aid you may be using.

Loan amounts also consider whether or not the student is dependent or independent. Dependent students are under age 24, unmarried, and have no dependents of their own. Undergraduate dependent students may borrow $5,500 the first year of college ($3,500 in subsidized loans), $6,500 the second year ($4,500 in subsidized loans), and $7,500 ($5,500 in subsidized loans) the third year and beyond, up to $31,000 total with $23,000 coming from subsidized loans. Current interest rates for Unsubsidized and Subsidized Direct Loans are fixed at 3.76%.

Independent undergraduate students may borrow more in unsubsidized loans each year ($9,500 the first year, $10,500 the second year, and $12,500 the third year and beyond) up to a maximum of $57,500. Graduate and professional students may borrow up to $20,500 each year, to an aggregate total of $138,500 that also includes any loan funding from the undergraduate years.

Graduate or professional students enrolled at least half-time and parents of dependent undergraduate students may take out a Direct PLUS Loan, which may cover the entire COA minus other financial aid funds received. PLUS Loans require a credit check and generally good credit in order to be eligible. The loan origination fee for Direct PLUS Loans disbursed between October 1, 2016 and October 1, 2017 is 4.276%, and the current interest rate is 6.31%.

Students may take out more than one type of federal student loan, and a Direct Consolidation Loan is a convenient way to combine these loans. As a result, students only need to make one payment each month instead of multiple payments. There is no application fee for consolidating eligible federal student loans, although it is important to note that this is new loan that may have different repayment plans and new rates. Terms from the old loans may change as a result.

Alternative Funding

At times, federal loans and other forms of financial aid are still not quite enough to afford higher education in Vermont, making private student loans a viable option. Vermont residents and out-of-state students attending a college or university in Vermont may be able to take out a Vermont Advantage Loan, which is a VSAC fixed-interest rate loan offered to both undergraduate and graduate students.  A credit check and a cosigner are required, and cosigners with good credit can help students obtain better rates. For example, if a student utilizes a cosigner with excellent credit, the loan origination fee is zero, while cosigners with slightly lower credit will pay a 3% fee, and those with good credit will pay 5 percent.Students may borrow funds in amounts as low as $200 or up to the full COA, as determined by the school and after subtracting out any other forms of financial aid. Interest rates are fixed for the life of the loan, and there are three repayment options to choose from that determine which rate students will pay. If students choose to begin repaying the Vermont Advantage Loan immediately, interest rates may be as low as 5.50 percent, while paying just the interest while attending school will mean rates may be as low as 5.90% . Deferring payments will set the interest rates at a minimum of 6.80% . Applications are completed online for the Vermont Advantage Loan.Other financial institutions, such as credit unions, banks, and credit card companies, may also offer private student loans that may have either fixed or variable interest rates. A fixed interest rate means that the rate stays the same for the life of the loan, while variable means that it can change. Sometimes rates go down, but variable rates may also increase over the life of the loan. When it comes time to repay student loans, there are many repayment options, and there are even options for having your loan forgiven.

There are several federal programs for students entering into high-demand and underrepresented fields that provide loan forgiveness, including the Teacher Loan Forgiveness Program, which may absolve up to $17,500 of Direct Subsidized or Unsubsidized Loans for teachers who teach full-time in a low-income and high-need field for five consecutive years. The Public Service Loan Forgiveness (PSLF) Program may forgive loan debt to those working full-time in a public service position after they have made 120 qualifying payments on their Direct Loans. The state of Vermont may also offer loan forgiveness to primary care physicals, nurses, nurse educators, and other health care professionals who practice in underserved or rural locations as well.

 
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