Accepting Student Loans

Before accepting a loan check, consider the following:

Is the school or program a good investment? A school must tell you about its: graduates’ success in job placement; tuition and refund policies; academic and training programs; financial aid programs; the faculty and facilities. Even if you do not graduate or are not happy with the education, you must still repay your student loan.

Are there other options? Check out all scholarships, grants, and work-study programs. Can you borrow less?

If borrowing, stay with one lender to simplify loan repayment. Many lenders make loans to students in California and policies differ.

Keep in touch with your lender. If you change your name, move, leave school, or change your graduation date, inform your lender promptly. If it appears that you are no longer in school or cannot be contacted by your lender, your loan could go into repayment.

Regular Stafford loan repayment begins six months after you drop below halftime student status. This six-month grace period allows you time to obtain employment and make preparations to begin loan repayment. Unsubsidized Stafford loan interest payments start immediately, with payment on the balance being on the same terms as the regular Stafford program. PLUS repayment starts within 60 days of the final disbursement of the loan.

Postponing repayment of your loan, called a deferment, for in-school, military, unemployment, and other reasons may be available to the Stafford and PLUS borrower. If not qualified for a deferment and unable to make payments, ask your lender for a hardship extension of “forbearance.” Check with your financial aid office or lender.

A defaulted loan means that the lender has turned the loan over to the state guaranty agency for collection and that the entire amount is due and payable. Consequences include: no more financial aid, garnishment of state and federal tax refunds, and a bad credit rating. The state will take all steps necessary to collect the money owed and will take the borrower to court and use other legal actions if necessary.