PACE Gold Solution Loan

Northwest Christian University is offering a new program called PACE (Providing an Affordable College Education) Gold Solution for the freshman class enrolling in the Fall of 2007. The PACE program allows parents of enrolling freshmen to borrow up to $15,000 per year under the Federal PLUS Loan program with Northwest Christian University paying the interest on the loan while the student is attending, up to four years. The student must be enrolled full-time, be classified as a dependent student from the FAFSA, and must stay continuously enrolled at Northwest Christian University to receive the interest subsidy.

No Payments Until the Spring Semester of the Student's First Year
Because this is a PLUS loan, half of the principal is disbursed at the beginning of the fall semester, and half is disbursed at the beginning of the spring semester. The first payment will be due within 60 days after the second disbursement.

No Prepayment Penalties
You can make additional payments on the principal balance of the loan at any time. In fact, you can make larger payments every month than what is minimally required, or you can make lump sum payments at any time to help reduce the amount of the loan.

Lower Monthly Payments than Alternative Payment Plan Options
Using a conventional tuition payment plan, a family that borrows $15,000 to finance their child's college education for the coming year would be expected to make 10 monthly payments of $1500 each, starting July 1, 2008. Borrowing $15,000 with the Northwest Christian University PACE Gold program would result in payments of $186 per month, and would then increase proportionally each year.

Borrower Benefits
Families who use this program each year will have four loans (one for each year of school) when their student graduates. Each loan has its own separate ten-year repayment period at a fixed interest rate of 8.5%. Immediately upon disbursement, the lender will reduce your interest rate by 1.0%. When you enter repayment, if you choose to make payments using auto-debit, your interest rate will be further reduced by 0.3%. Most private loans do not cap the interest rate, which makes the PACE Gold PLUS loan more attractive. After graduation, the PACE Gold PLUS loans can be consolidated which can extend the repayment period and reduce the monthly payment.

How does the Northwest Christian University PACE Golf program work?
Each year, parents borrow a federal parent (PLUS) loan. Payment begins in the spring term of the first year. Under the subsidized Northwest Christian Universtiy PACE Gold program, the family will have paid little or no interest on principal balances of up to $15,000 per year during the time that their student is enrolled as an undergraduate student at NCU. Amounts borrowed in excess of $15,000 will accrue regular interest charges and are considered to be part of the unsubsidized loan.

Although payments cannot be applied as "principal-only", the net effect of the PACE Gold PLUS accrued interest payments means that most or all of your payments will go towards principal. Beginning with graduation, or following four years of attendance, the loan subsidy ends and the family becomes responsible for the regular interest accrual. The loan subsidy will also end if the student withdraws or drops below full-time status at Northwest Christian University during the first four years of attendance.

How will it work?
Determine the amount you wish to borrow. You may borrow up to the annual costs minus all other financial aid received.

Graduated Payment Schedule
You will be billed according to the graduated payment schedule. Your payment will increase each year as you borrow additional loans. For example, at an 8.5% fixed interest rate for a $15,000 loan, your monthly payment is about $186 for the first year and increases to $372, $558 and $744 for the second, third and fourth years, respectively. Under federal loan guidelines, repayment does not begin until the loan is fully disbursed. Consequently, payments will not increase each year until the spring term. For example, the sophomore year loan will not enter repayment until spring of the sophomore year.

Additional Reasons to Consider this Approach
This program can help you finance four years of education and provides an alternative for managing college savings funds. While many families are judged to have sufficient resources to cover all or a large part of college costs based un the Expected Family Contribution calculated from the FAFSA, actually freeing up their resources to pay for college isn't always easily accomplished. By using the Northwest Christian University PACE Gold Solution program, many families are comforted that they do not have to sell mutual funds or stock assets at this point, even though they may plan on repaying all or a portion of their loans with these assets at a later time. In the meantime, they are enjoying the affordable terms of the Northwest Christian University PACE Gold Solution program.

Sufficient savings are realized with the PACE Gold Solution over the traditional PLUS program. The table below illustrates the savings the average family may enjoy under the PACE Gold Solution.

To apply for a PACE Gold PLUS loan you must fill out an application and submit it to the Financial Aid Office at Northwest Christian University. Your credit will be checked, and if you are approved for the loan, you will need to fill out a Master Promissory Note that will be forwarded to your lender.