LOAN QUESTIONS

What is a Federal Perkins loan?

Available to U.S. citizens or eligible non-citizens. The loan limit is $5,500 per academic year for undergraduate students and $8,000 for graduate and professional students. The actual award amount may be less based on annual funding and UCLA’s institutional awarding policy. The loan interest rate is 5 percent. Loan repayment and interest accrual begin nine months after graduation or less than half-time enrollment.

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What are Direct Subsidized and Unsubsidized loans?

The William D. Ford Direct Loan Program consists of low-interest subsidized and unsubsidized loans financed by the Department of Education. Loans are available to undergraduate, graduate, and professional students who are U.S. citizens or eligible non-citizens. For loans with enrollment period that starts on/after July 1, 2012 only Unsubsidized Loan will be available to graduate students. Loan repayment begins six months after graduation or dropping below half-time enrollment. Deferments and forbearances are available. The interest rate is fixed and adjusted on July 1 every year. For additional information, please refer to the Guide to Subsidized and Unsubsidized Direct Loans available under ‘Publications’ on this website.

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What is a Direct PLUS loan?

The William D. Ford Direct PLUS Loans are designed to help graduate students and parents of undergraduate students meet their educational costs. Graduate students and parents may borrow up to cost of education for the academic year, less any other financial aid received. PLUS loans are funded by the Department of Education and available only to borrowers who do not have adverse credit histories. Borrowers with adverse credit may be able to qualify with an endorser. The interest rate is fixed. Parent PLUS repayment begins 60 days after the loan is fully disbursed. Graduate students do not enter repayment while enrolled at least half time.

For additional information, please refer to the Graduate PLUS Guide and the Parent PLUS Guide available under ‘Publications’ on this website.

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How do I apply for a federal student loan?

Federal Loans (Perkins Loan, Direct Subsidized Loan, Direct Unsubsidized Loan and Direct GradPLUS Loan) require that a financial aid application, FAFSA, be completed every academic year, for which the borrower is interested in receiving loans. Once the Financial Aid Office receives your FAFSA from the federal processor, we will determine your eligibility for the different types of federal loans available.

An electronic Financial Aid Notification (eFAN) will be sent to you to let you know what loans have been offered. You will need to accept the offer on your eFAN, which will prompt UCLA to send the certification of your loan eligibility to the Department of Education. Before the loans are funded, you will also need to complete a promissory note for the loan(s) you are planning to borrow. Please refer to Do I need to complete loan promissory notes every year? for additional information about promissory notes. Refer to the Guide to Subsidized and Unsubsidized Federal Loans and Graduate PLUS Guide (available under Publications on this site) for more detailed information.

NOTE: First time student borrowers at UCLA are also required to complete a Debt Management Session with Student Loan Services, before their loans can be disbursed. The DMS can be completed on the web at www.loans.ucla.edu.

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How do I apply for a federal parent loan?

A financial aid application, FAFSA, must be completed for every academic year, for which the borrower is interested in receiving Parent PLUS loan. Once the Financial Aid Office receives your FAFSA from the federal processor, we will determine your eligibility for Parent PLUS. An electronic Financial Aid Notification (eFAN) will be sent to you to inform you and your parent how much they can apply for in a parent PLUS.

To apply for parent PLUS, the borrower must request the loan and complete a Direct Loan Master Promissory Note (if borrowing for the first time) at www.Studentloans.gov. Once the application process is complete Department of Education will contact UCLA Financial Aid Office and we will verify your eligibility.

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Do I need to complete loan promissory notes for federal loans every year?

Federal Loans (Perkins, Subsidized/Unsubsidized Direct Loans and Direct PLUS) require that a Master Promissory Note (MPN) be completed only once, when you borrow for the first time. Once submitted, the MPN is valid for 10 years. To submit an MPN for Direct Subsidized/Unsubsidized or PLUS Loan go to www.StudentLoans.gov (there are separate promissory notes for the SUB/UNSUB program and for PLUS). To submit an MPN for a Perkins Loan go to www.loans.ucla.edu (your Perkins MPN will be available 2-3 days after you accept a Perkins loan on your eFAN).

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I applied for a loan but have not received any disbursements?

A couple of factors may prevent your loan from being funded in a timely manner:

• Department of Education (for SUB, UNSUB or PLUS) or UCLA (for Perkins). To verify that your promissory note is complete contact –

• For SUB/UNSUB or PLUS go to www.StudentLoans.gov or call 800-557-7394.


• For Perkins Loan – contact UCLA Student Loan Services at 310-825-9864


• For private Loan – contact your lender. Private lender contact information can be found on the Preferred Lender List or FastChoice information under ‘Publications' link on this site

• You are a first time borrower and have not completed a Debt Management Session. If you are borrowing a Perkins or a Direct Loan for the first time at UCLA, you MUST complete the Debt Management Session requirement with Student Loan Services at www.loans.ucla.edu.

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What are Private Loans?

Private Loans are funded by banks and private lending institutions. These loans are credit based and are not federally regulated so their terms will vary depending on the lender. Private Loans that require certification by the Financial Aid Office can be certified up to a student's Cost of Education minus other aid received for the period. To find out more information about Private Loans, please refer to The Private Guide and Private Loan Preferred Lender List, available in the FAO Publications on our site.

Private student loans are issued based on credit. This means two things for those applying for a private student loan.

• The loan will be based on the borrower’s credit score.

• Normally, the better the credit score, the better the interest rate.

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What is a preferred private lender and why are they preferred?

• Every year, the UC Office of the President evaluates many private lenders and prepares a list of preferred lenders in order make it easier for our parents and students to select a lender for their educational loans and to compare the borrower benefits that are available. Preferred lender selection for private loans is based primarily on price and the borrower’s customer service experience.


• In addition, UCLA’s Financial Aid Office compiles a list of all lenders who worked with UCLA’s borrowers in the last three years on the FastChoice list. The FastChoice list also provides information on the process (electronic vs. manual/paper) that is supported at UCLA by the lenders listed.


• Both lists, the Preferred Private Lender List compiled by OP and the FastChoice List are available under the ‘Publications’ link on this website.

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What is the difference between an electronic and a paper private lender?

Private lenders who are set up for an electronic process with UCLA will communicate with us via files exchanged between the lender and UCLA’s Financial Aid Office. Certification requests will be transmitted to and returned back to your lender electronically. Disbursements will be sent to UCLA via an electronic roster and will be applied to your BruinBill account to cover charges posted for the term. If you have BruinDirect, any funds left over after charges are paid will be deposited in your bank account by Student Financial Services.

If the lender you select is a ‘paper lender’ they are not set up for an electronic process at UCLA. We will manage these loans via a paper process. This means that:

• We will not be able to certify your loans electronically. We will receive a fax or an e-mail from your lender requesting that your loan be certified. The certification will be completed manually by one of our counselors and faxed back to the lender.


• We will not be able to monitor your loan process because we do not receive electronic status updates from the lenders that are not electronic. If you need to check on the status of your loan, please contact the lender directly.


• The lender will not be able to disburse your funds electronically to UCLA. Instead, a paper check will be sent to Student Loan Services at the beginning of each term that you will need to pick up in person.


• Because the loan will be disbursed via a paper check, the Financial Aid Office will not be able to disburse those funds to your BruinBill account in order to pay any outstanding charges (i.e. tuition and fees).

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Do I need to complete loan promissory notes for a private loan every year?

Most private loans require a new promissory note to be submitted every year. At the time you apply and are approved for a private loan, the lender will provide the promissory note for you to complete or they will refer you to a link where you can complete your promissory notes on line. Please check with your private lender for instructions on how to complete their loan process

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Will I need a co-signer for my private loan?

Generally there are two circumstances when a consigner is needed, even if the borrower has some credit.

One of those times is when the borrower does not have an established credit history which leads to a low credit score. Having a cosigner when applying for private student loans will increase your odds of being approved.

The second circumstance to use a consigner would be to obtain a loan with a lower interest rate. The difference in monthly payments on a $10,000 loan can be $50 or more when comparing a 8% interest rate and a 12% interest rate. Also the difference in the accrued interest rate could be as much as $4,900 over the life of the loan. Certainly something to give thought to!

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What should the co-signer consider?

Having a cosigner can be a win-win situation, but it can also have its drawbacks. Here are some things to consider before cosigning for a private student loan.

• Make sure if the borrower does fail to repay, that you can make the payments yourself.
• Make sure the person you’re cosigning for is trustworthy. Cosigning between girlfriends/boyfriends is never a good idea. If the romance goes South, the other one could be left holding the bag. Cosigning for a bum who won't work or flunks out of school can be a hard pill to swallow also.
• If you do cosign, make sure you get copies of all the papers. Remember, those with the best paper trails win.
• Get an agreement, in writing and notarized, that the borrower will repay you all fees incurred including the monthly payments, should they fail to repay the loan and you’re forced to. You don’t want to wind up years down the road and the borrower tells a Judge that you volunteered to repay the loan as a gift.

Now that you have this information, if you cosign for a loan, make sure you do it right! Cosigning for a private student loan has its pros and cons, just make sure you know what they are before signing on the dotted line.

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