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U-M Available Sources of Financial Aid Program Description

Internal Sources

Federal Perkins Loan: This is a campus-based federal program which carries 5% interest. Effective 7/1/93, repayment commences after a nine month post-graduation grace period. Maximum yearly award is $6000. Interest does not accrue until repayment commences. Maximum repayment of 10 years.

University Loan (UML): Donor-specified dollars to be made available as loans to medical students (with or without restrictions). 0%-7% simple interest which accrues from the date of the award. All University Loans are due one year after graduation or monthly repayment begins at this time. No grace period is offered. Parental and student financial information is used to determine eligibility.

University Grant in Aid: Donor-specified dollars made available as grants to medical students (with or without restrictions). Parental and student financial information is used to determine eligibility. Funds do not have to be repaid.

Scholarship for Disadvantaged Students (SDS): * Federal scholarship available to students from disadvantaged backgrounds and who demonstrate need. Parental and student financial information is used to determine eligibility.

Loans for Disadvantaged Students (LDS): * Federal long-term 5% loan which is offered to students from "Disadvantaged" backgrounds. Repayment begins one year after student ceases to be enrolled full-time and is deferrable throughout residency. Parental and student financial information is used to determine eligibility.

Primary Care Loan (PCL): Federal loan program available only to selected students who agree to commit themselves to primary care residency and practice. The Department of Health and Human Services defines primary care as family medicine, general internal medicine, general pediatrics, and preventive medicine. Interest rate is 5% and is subsidized during school and during residency. This loan is deferrable throughout residency training. Maximum repayment of 25 years after a 12 month-grace period. Parental and student financial information is used to determine eligibility.

The obligations will include:
o Completion of a primary care residency not more than four (4) years after graduating from medical
school;
o Practice of primary care medicine until the loan has been repaid.

The penalty for breaking the obligation is as follows:
o The interest is recalculated at 18% (instead of 5%) beginning on the date of noncompliance.

External Sources

William D. Ford Federal Direct Subsidized Stafford Loan: Federal program with an annual maximum of $8500 per year, with the interest subsidized by the government until repayment begins. 3% origination fee (fee subject to change) is deducted before the award is disbursed. A new repayment incentive is an up-front interest rate rebate worth 1.5 percent of the original principal loan amount for all loans made through the William D. Ford Federal Direct Student Loan Program, beginning with the 2000-01 academic year. Borrowers must make their first 12 loan payments on time to keep the benefit. If any of the first 12 payments are late -- more than six days after the scheduled payment date -- the rebate is added to the outstanding balance at the end of the first repayment year. Over a standard ten-year loan, this rebate amounts to an interest rate reduction of 0.24 percentage points. This program allows 2-year residency deferment for students who have borrowed Federal Stafford or SLS prior to 7/1/93. Four repayment options are available ranging from 10 years to a maximum of 25 years. Consolidation programs are also available. Interest is variable capped at 8.25%.

William D. Ford Federal Direct Unsubsidized Stafford Loan: Federal program with an annual maximum of $45,167 per year, based on length of academic year, minus the amount received from the Federal Direct Subsidized Stafford. Allows 2-year residency deferment for students who have borrowed Federal Stafford or SLS prior to 7/1/93. Four repayment options are available ranging from 10 years to a maximum of 25 years. Consolidation programs are also available. Interest rate is variable and subject to change each July 1, capped at 8.25%. Interest accrues continuously from the date of disbursement and is payable quarterly. 3% origination fee deducted before award is disbursed (fee subject to change). A new repayment incentive is an up-front interest rate rebate worth 1.5 percent of the original principal loan amount for all loans made through the William D. Ford Federal Direct Student Loan Program, beginning with the 2000-01 academic year. Borrowers must make their first 12 loan payments on time to keep the benefit. If any of the first 12 payments are late -- more than six days after the scheduled payment date -- the rebate is added to the outstanding balance at the end of the first repayment year. Over a standard ten-year loan, this rebate amounts to an interest rate reduction of 0.24 percentage points.

Alternative Loan Programs: There are numerous "Alternative Loan Programs" available that are specifically designed for medical students. If you have a need within your financial aid package for one of these loans, information on the various programs will be provided to you along with your award notification.

* An individual from a disadvantaged background is defined as someone who either comes from an environment that has inhibited the individual from obtaining the knowledge, skill and abilities required to enroll in and graduate from a school; or comes from a family with an annual income below a level based on low-income thresholds according to family size published by the U.S. Census, adjusted annually for changes in the Consumer Price Index, and adjusted by the Secretary of Health and Human Services for adaptation to this program.