Bank Loan

  1. Securing the Bank Loan: Upon being hired for an off-campus practicum internship, the student will secure a loan from a University-authorized Bank to pay for program costs. (Students also have the option to pre-pay for all or part of these costs, as described under the Registration section) The University will pre-arrange loans with a University-authorized Bank for students on the Program. This means that students will be accepted for the loan without posting any collateral. While the bank will require some information from each student, they plan to extend credit to students in this Program who have been hired for off-campus practicum internships. The bank, of course, will require all students to sign a bank loan agreement. The student’s bank loan will be at an interest rate set by the Bank based on its rates at the time of the loan. Loan repayment schedules usually range between 12 and 24 months depending on the size of the loan and salary earned.In addition to bank loans, there are other repayment methods for certain internships such as intern and contract positions which do not allow for a loan to be taken out because of a low salary or a short term of employment. In these cases, students will be asked to pay a portion of their monthly earnings towards their MUM debt which will be applied to their student account balance as a credit. Students consult with the Career Center to determine the monthly amount and then sign an Intern Agreement Form as a condition for their work authorization.Please note that when a practical training internship is obtained, the amount of the monthly bank loan payments will be determined using estimated living expenses for single individuals, even if the student is married. Also, when you start working, your M.U.M. debt is your first priority. Students are not allowed to include personal debts as part of their loan calculations.
  2. Direct Deposits: A requirement of the Program is that a student must arrange with the employer for an electronic direct deposit of the paycheck* into their checking account at the local bank in Fairfield which issues the loan. The bank will automatically withdraw the loan payment each month from the student’s checking account. For example, if the student’s monthly gross income is $4,000 and the withholding taxes are $900, then the paycheck will be for $3,100. Upon receiving $3,100 into the student’s checking account through direct deposit from the employer, the bank will deduct the loan payment of $1,000, for example, leaving a balance of $2,100 in your account.* If the employer will direct deposit your paycheck into 2 different bank accounts, then only the monthly loan payment need be deposited into the Fairfield bank, and the balance can be deposited into your local account. Failure to use Direct Payroll Deposit to fund your loan payment results in an annual fee of $500 charged to the student.If your employer cannot direct deposit into 2 different accounts, we suggest one of the 4 options below to gain access to the balance of your money above the monthly loan payment amount:
    • Write yourself a check on your Fairfield bank account for the balance of your money and deposit it into your local account (example: $3,100 was directly deposited to your Fairfield account, your loan payment is $1,000, write a Fairfield check for $2,100 to yourself and deposit it in your local bank account).
    • Use your Fairfield bank debit card or ATM card to withdraw the balance at a local ATM machine.
    • Initiate a wire transfer to deposit the balance of your paycheck into your local bank account. It is possible to do this over the Internet with online banking.
    • Have your local bank set up a monthly automatic electronic transfer. Most banks will help you transfer money into your account from another bank without a fee. Set up the automatic transfer for the day after your paycheck is deposited into your Fairfield bank account.
  3. Loan Payments when Laid Off from Employment
    • While you are employed, you are expected to save at least 50% of your budget surplus toward making loan payments should you be laid off; and save 50% of your budget surplus toward paying your living expenses during a laid off period.
    • For example, if your loan payment was $1,500/mo., and your living expense budget was $1,800, and your net monthly pay after taxes was $4,100, you would have a monthly surplus of $800, and total yearly savings of $9,600. You would be expected to save $400/mo. toward future loan payments.
    • In the above example, if you worked for one year, and then were laid off, you would have $4,800 saved for making loan payments, so you would be able to make 3 monthly loan payments. Most lay-offs last 4-8 weeks, so you would also have enough savings to pay your living expenses of up to 2-3 months or $4,800 during that period of being laid off. Note that the example above varies with each student: Some students have less monthly budget surplus savings due to a lower salary, and many students save more than $800/mo. due to having a higher salary, or having a lower loan payment.
    • If you were still laid off after making loan payments from your savings, you would notify the Career Center Office by the first day of the month that the payment is due and ask for assistance for your next payment. If appropriate, MUM would arrange to pay on your loan that month. Each month you need assistance in paying your loan, you would contact the Career Center by the first day of that month. This payment would be charged to your MUM Student Account and you would have to repay MUM in a timely way once employed again, or at least before you graduate.
    • In the event of an emergency during a period of being laid off, you may contact us and request that your loan payment be reduced to interest only for one or two months. This option is included in your MidWestOne Bank loan for a maximum of 2 months during the life of the loan and requires MUM approval of the interest extension. This extends your loan 1 or 2 months, but reduces the amount due to only the interest that month (varies according to the timing of the request, but is roughly $125 at the mid-point of a loan). MidWestOne Bank would send you a form to sign. Return the signed form by U.S. mail or delivery service to the address given to you by MidWestOne Bank.
  4. Default on Loan or Delayed PaymentsFailure by the student to make any monthly loan payment within 30 days of the payment due date will be considered in default on the loan for the purposes of this Agreement.If a student defaults on the bank loan specified in this Agreement, the University may elect to pay part or all of the outstanding balance of the student’s loan to the bank. In this event the student will be liable to immediately pay to the University the full amount paid by the University to the bank. If the University pays part or all of the student’s outstanding loan balance due to a default by the student, the bank will nonetheless enter that loan default on the student’s national credit record.If within 30 days the student does not repay the University for making a loan payment, the University may also elect to allow the student to continue with the ComPro program in return for an administrative and interest fee of 10% of the amount the University paid. This fee, and the loan amount paid by the University, would be applied to the student’s account. All student account fees and charges must be paid prior to graduation. This procedure applies for any loan payment the University makes on behalf of a student, whether the loan payment was delinquent or not.The provisions of the promissory note signed with the bank by the student further establish the student’s responsibilities.The University will apply a $500 administrative charge for not setting up direct deposit within 60 days of being hired. It may take your employer one or two pay cycles to set this up. This $500 charge must be paid to the University prior to graduation.
  5. Legal and Collection Costs In the event that a student violates either this Agreement or the Bank loan agreement, the student will be required to pay all legal and collection costs incurred by the University in enforcing these agreements.