Federal Employees Newark Federal Credit Union

EDUCATIONAL LOAN PRICING/REQUIRMENTS/POLICY

EDUCATIONAL LOAN PRICING

Unsecured Loans

As of 6/30/2009 Prime Interest Rate was 3.25%

Terms and Conditions

• Payment, deferred, interest accrues for up to 60 months, or un-enrolled from school.
• APR tied to Prime Rate, adjusted quarterly.
• Opening a mandatory checking account at Federal Employees Federal Credit Union provides .25% rate discount provided monthly payments are transferred from this account.
• Graduate with a GPA of 3.0-3.49, offer .25% discount off of rate when loan goes to repayment.
• Graduate with a GPA of 3.5-4.00, offer .50% discount off of rate when loan goes to repayment.
• Origination fees to be taken out of loan proceeds.
• All distributions made payable to College or University.
• Cosigners required for under graduate borrowers.
• Borrowers need to provide evidence of current enrollment each semester, and apply for increase in LOC.
• Debt to income ratio should be less than 50% as a general guideline.
• Annual maximum draws $25K, subject to verification from Financial Aid.

Qualification Requirements

• Either the applicant’s or cosigner’s credit score must be greater than 575.
• Student must be at least half-time enrollment in a degree program.
• Cosigner must provide two (2) most recent pay stubs and last year’s W-2.
• Origination fees deducted from loan proceeds.

Student Loan Policy Guidelines

Loan Limits: FENFCU will not lend more than a combined total of $100,000 to any one single undergraduate borrower or co-borrower/co-signer. Graduate borrowers and consolidation loans are limited to a cumulative total of $250,000. The annual maximum loan amount will not exceed $25,000. Minimum loan amount is $1,000.

Loan Length: FENFCU will offer up to a maximum 60 month deferred payment term, and up to a maximum 240 month repayment period.

Loan Pricing: FENFCU will utilize a risk based interest rate pricing scheme which will be tiered according to individual FICO credit score.

School Certification: All loans will be certified by the College or University Financial aid department prior to disbursement. The final loan amounts to be disbursed will be determined by the Financial aid office.

Deferral Periods: Repayments of principal and interest will begin 6 months from the student graduating, or un-enrolling from the College or University. FENFCU will certify the loan annually to confirm borrower is currently enrolled, has graduated, or un-enrolled.

Variable Rate: The loans are variable rate, indexed to the Prime Interest rate, and adjusted quarterly. There is an annual interest rate ceiling of 18%. There is an annual interest rate floor of 4%.

Capitalization of Interest: Accrued, but unpaid interest will be added to the principal amount outstanding after the deferral period.

Loan Origination Fee: FENFCU may charge a loan origination fee which will be added to the amount borrowed and financed over the term of the loan. Origination fees are not refundable in the event the loan is repaid early.

Forbearance: FENFCU may consider modifying the terms of the loan in the event of hardship (i.e. financial or medical difficulty). Interest will continue to accrue during any period of forbearance.

Non-dischargeability in Bankruptcy: The loans are limited on dischargeability in bankruptcy contained in Section 523 (a) (8) of the United States Bankruptcy Code.

Co-signer release Option: FENFCU may elect to offer a co-signer release on the loan obligation provided certain stated conditions are achieved.

Preferred Rat: FENFCU may elect to offer preferred interest rates for borrowers who utilize other credit union products/services and also for excelling academically.