Types of Loans
Federal Direct Subsidized Stafford Loans
Loans from this program are awarded to students with financial need. This loan is subsidized because the federal government pays the interest while the student is in school and during the grace period (the first six months after leaving school or dropping to less than half time enrollment status). [How to apply]
Federal Direct Unsubsidized Stafford Loans
The unsubsidized loan is not based on financial need and is available to all eligible students, regardless of income. This loan is unsubsidized because the student is responsible for paying all interest due. There is no federal interest subsidy for the loan. Interest accrues immediately upon disbursement. Borrowers may elect to pay accrued interest on a monthly or quarterly basis or have it added back to the principal balance in a process called capitalization. [How to apply]
Federal Direct PLUS Loan Program (Parent Loan)
A parent may borrow up to the annual cost of education minus any estimated financial aid received by the student. The application approval process includes a standard credit analysis for all parent borrowers. The repayment period for parent borrowers begins on the day the loan is fully disbursed (e.g., in spring). The first payment of principal and interest is due within 60 days after the final loan disbursement is made. [How to apply]
Alternative Loan Programs
Alternative loans are funds available to you when you are not eligible for financial aid or need additional funds to meet educational expenses. Your eligibility is determined by the cost of attendance minus other financial aid or the annual loan maximum amount as determined by the lender.
Because Alternative Loans are not guaranteed by the federal government, they must be insured privately. This extra cost is passed on to the borrower in the form of higher fees and interest rates. In addition, the lender will look at your credit history as well as other factors to determine if they will lend to you. You may be denied by one lender and approved by another because of the different ways the lender interprets your information. [How to apply] [top]
The State of California requires that you be told the following: Students should consider exhausting federal student loan eligibility before contemplating the use of private student loans. Apply for federal student aid, which includes federal student loans, grants and workstudy; by submitting the Free Application for Federal Student Aid (FAFSA) online at http://www.fafsa.ed.gov/.
Students considering student loans need to be aware of the differences between federal student loans and private student loans:
- Federal student loans are required by law to provide a range of flexible repayment options including, but not limited to, income-based and income-contingent repayment plans as well as loan forgiveness benefits that private lenders are not required to provide.
- Federal direct loans are available to most students regardless of income. Other qualification criteria do apply. For more information, please visit http://studentaid.ed.gov/eligibility.
- Private student loan lenders can offer variable interest rates that can increase or decrease over time, depending on market conditions.
- The interest rate on a private loan may depend on the borrower’s and/or co-signer’s credit rating.
- Private student loans have a range of interest rates and fees and students should determine the interest rate of, and any fees associated with, the private student loan included in their financial aid award package before accepting the loan. Students should contact the private student loan lender if they have any questions about interest rate, fees, repayment terms, etc..