What Does It Mean To Borrow A Loan?
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
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
Keep in touch with your lender and your
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.