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What Does It Mean To Borrow A Loan?
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Before accepting a loan, consider the following:

Are there other options?

Check out all scholarships and grants. Can you borrow less?

If borrowing, stay with one lender to simplify loan repayment.

Many lenders make loans to students in California and their policies differ. See "Choosing a Lender".

Federal Subsidized Stafford Loan repayment begins six months after you drop below half-time student status or graduate.

This six-month grace period allows you time to obtain employment and make preparations to begin loan repayment. Federal Unsubsidized Stafford Loan interest payments start immediately, with payment on the principal the same as the Subsidized Stafford Loan Program.

Keep in touch with your lender and your school.

If you change your name, move, leave school or change your graduation date, inform your lender promptly. If you cannot be contacted by your lender, your loan could go into repayment or default.

Postponing repayment of your loan, called a deferment, for in-school, military, unemployment and other reasons.

Deferments are available to Federal Stafford borrowers. If you are not qualified for a deferment and are unable to make payments, ask your lender for a hardship extension or "forbearance".

A defaulted loan

If your loan is in default, it means the lender has turned the loan over to the state guaranty agency for collection and the entire amount is due and payable. Consequences include: no more financial aid, garnishment of state and federal tax refunds, wage garnishment 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 action if necessary.

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