Are there any Alternatives to Consolidation?
Before you decide to consolidate, consider the available alternatives:
- If you need a lower monthly payment, research different repayment options offered by the Department of Education. You can find this information under "Managing Repayment" at www.Studentaid.gov.
- If you are temporarily struggling to keep up with your loan payments, consider a deferment or forbearance that allows you to postpone or reduce your monthly payment. Contact your loan servicer to find out about deferment and forbearance options.
Can I Consolidate My Private Loans?
Please contact your lender about consolidation or refinancing options for private loans.
Do I need to accept loans to convert them to work-study?
No, if you plan on converting loans to work-study, leave that amount as "Offered" and not as "Accepted." You can accept a lesser amount and hold the difference in reserve to convert to work-study. Please contact the Financial Aid and Scholarships office to have your work-study converted to a loan.
Do I Need To Complete A Loan Promissory Note 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 note on line. Please check with your private lender for instructions on how to complete their loan process.
Do I Need To Complete Promissory Notes For Federal Loans Every Year?
Federal Loans (Subsidized/Unsubsidized Direct Loans and Direct PLUS) require that a Master Promissory Note (MPN) be completed 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.Studentaid.gov (there are separate promissory notes for the SUB/UNSUB program and for PLUS).
How Do I Apply For A California Dream Loan?
Funding for the California Dream Loan program comes from the State of California and the University of California System. Undergraduate students who are not eligible to apply for federal loans and who qualify for Non-Resident Supplemental Tuition Waiver under AB540 must complete a California Dream Act Application before the March 2 priority filing deadline in order to be considered. If eligible, your California Dream Loan will be included on your financial aid notification (FAN).
How Do I Apply For A Federal Parent Loan?
A financial aid application, FAFSA, must be completed annually. Once UCLA Financial Aid and Scholarships receives your FAFSA information from the federal processor, we will determine your eligibility for Parent PLUS. A Financial Aid Notification (FAN) will be posted on MyUCLA to inform you and your parent of how much they can apply for in a parent PLUS.
The borrower cannot apply for a parent PLUS by accepting it on the FAN. To apply, the borrower must request the loan at www.Studentaid.gov. After completing the PLUS request, the borrower must also complete a Direct PLUS Loan Master Promissory Note at www.Studentaid.gov. The Direct PLUS Master Promissory Note is only required to be completed once. If an endorser is required, a new Master Promissory Note will be required for each time a new PLUS loan is endorsed. Once the application process is complete, the Department of Education will contact UCLA Financial Aid and scholarships and we will verify your eligibility.
How Do I Apply for A Federal Student Loan?
Federal Loans (Direct Subsidized Loan, Direct Unsubsidized Loan and PLUS Loan) require that a FAFSA be completed every academic year for which the borrower is interested in receiving loans. Once UCLA Financial Aid and Scholarships receives your FAFSA information from the federal processor, we will determine your eligibility for different types of federal loans available.
A Financial Aid Notification (FAN) will be made available on MyUCLA to let you know what loans have been offered. You will need to accept the loan(s) offered on your FAN so that we may 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. Refer to the loan guides available on our Forms and Publications page for more detailed loan application 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.
How Do I Consolidate My Loan?
You apply for a Direct Consolidation Loan through Studentaid.gov. This process offers both electronic and paper options. You can complete the electronic application, as explained below or you can download and print a paper application from StudentLoans.gov for submission by U.S. mail.
Once you sign in to Studentaid.gov using your personal identifiers and Federal Student Aid PIN, you will be able to electronically complete the Federal Direct Consolidation Loan Application and Promissory Note. The electronic application on StudentLoans.gov consists of the following five steps:
1. Choose Loans & Servicer
2. Repayment Plan Selection
3. Terms & Conditions
4. Borrower & Reference Information
5. Review & Sign
After you submit your application electronically via Studentaid.gov or by mailing a paper application, the consolidation servicer selected will complete the actions required to consolidate your eligible loans. The consolidation servicer will be your point of contact for any questions you may have related to your consolidation application.
It is critical that you continue making payments, if required, to the holders or servicers of the loans you want to consolidate until your consolidation servicer informs you that the underlying loans have been paid off.
How Will My Private Loan Be Disbursed?
Depending on which lender you choose, disbursements will be sent to UCLA electronically or via a paper check. Electronic disbursements will be applied to your BruinBill account and, if you have BruinDirect, will be refunded to your bank account. Paper checks will be sent to UCLA’s Student Loan Office and will need to be picked up in person in A227 Murphy Hall. FastChoice lender list on our website (https://www.financialaid.ucla.edu/Forms-and-Publications) includes information on whether the lender you selected will deliver disbursements to UCLA electronically or via paper checks. If you are not sure, please contact UCLA’s Financial Aid and Scholarships office.
I accepted a loan but have not received any disbursements?
Several factors may prevent your loan from being funded in a timely manner:
- You are not enrolled at least half time. Half Time is considered 6 units for an undergraduate student, and 4 units for a graduate student.
- You have holds on your student account. Please check MyUCLA.
- You did not complete a Master Promissory Note (MPN) with the Department of Education (for SUB, UNSUB or PLUS) or UCLA (for Perkins). Contact Financial Aid and Scholarships to find out whether your promissory note is required OR:
- You are a first time student 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 at www.loans.ucla.edu.
- If you accepted a Parent PLUS loan on your FAN but the borrower did not request a PLUS loan at www.StudentLoans.gov, your PLUS loan will not be disbursed.
Should I Consolidate My Federal Loans? Disadvantages?
- Consolidation prolongs the life of the loan –you will make more payments over the life of the loan and pay more in interest. Be sure to compare your current monthly payments to want your monthly payments would be if you consolidated your loans.
- Forfeiting of the original repayment incentives – borrower benefits from your original loan may include interest rate discounts, principal rebates or some loan cancellation benefits. These benefits will be forfeited during consolidation.
- Pay more interest over longer repayment period.
- Loss of loan forgiveness eligibility – a borrower who consolidates a Perkins loan loses eligibility for the Teacher Loan Forgiveness program on that loan.
If you want to lower your monthly payment amount but are concerned about the impact of loan consolidation, talk to the servicer of your loan about different repayment plans that may make your repayment more manageable without consolidation.
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. These loans are available to undergraduate, graduate, and professional students who are U.S. citizens or permanent residents. Students who wish to be considered for these loans must file a FAFSA annually.
Subsidized loans, on which the student does not accrue interest, while enrolled at least half time, are available to undergraduate students only. Unsubsidized loans begin accruing interest upon disbursement. 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 loan guides available under ‘Forms and Publications’ at www.financialaid.ucla.edu.
Federal student loans are available to most students regardless of income and provide a range of repayment options including income-based repayment plans and loan forgiveness benefits, which other education loans are not required to provide
What Are Private Loans?
Private Loans (also referred to as Alternative Loans) are funded by banks and private lending institutions. A financial aid application (FAFSA) is not required in order to be considered for a private loan although we recommend that you submit one so that UCLA Financial Aid and Scholarships can determine if you can qualify for federal loans. Federal student loans typically have more attractive terms than private loans. Private loans are credit based and are not federally regulated so their terms will vary depending on the lender. Private Loans require certification by UCLA Financial Aid and Scholarships and 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 loan guides and private lender lists available under Forms and Publications at www.financialaid.ucla.edu. 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. Applying with a co-signer can secure a lower interest rate on a private loan.
- Normally, the better the credit score, the better the interest rate.
Please read the Corbett Disclosure before you decide whether to apply for a private loan.
What Are The Cosigners Obligations On A Private Loan?
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.
- If you do cosign, make sure you get copies of all the loan documents.
- 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.
- Ensure that the borrower cannot claim 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.
What is a Direct PLUS Loan?
The William D. Ford Direct PLUS Loan is designed to help graduate students and parents of undergraduate students meet their educational costs. Students who wish to be considered for these loans must file a FAFSA annually. Graduate students and parents may borrow up to cost of education for the academic year, less any other financial aid received. Unlike Direct Subsidized and Unsubsidized loans, Direct PLUS loans are based on credit and approved for borrowers that do not have an adverse credit history. Borrowers with adverse credit may be able to qualify with an endorser. The interest rate is fixed and adjusted on July 1st of each year. Parent PLUS repayment begins 60 days after the loan is fully disbursed but payments can be deferred until the student graduates. Graduate students do not enter repayment while enrolled at least half time. For additional information, please refer to the loan guides available under ‘Forms and Publications’ on www.financialaid.ucla.edu
What Is Consolidation?
Loan Consolidation allows you to refinance any or all of your outstanding federal student loans to create a single new loan with one monthly payment.The new loan will have a fixed interest rate, new terms,and may have an extended repayment period of up to 30 years. Any repayment benefits that existed on the underpaying loans will no longer exist for the consolidation loan. To find more information about Direct Consolidation Loan go to: https://studentaid.ed.gov/sa/repay-loans/consolidation.
What is the difference between federal and private loans?
If you are planning on utilizing student loans, you will need to be aware of the differences between federal 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; however, other qualification criteria may apply. For more information, please visit http://www.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 profile.
- Private student loans have a range of interest rates and fees. 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 lender of the private student loan or their UC campus’ financial aid office if they have any questions about a private student loan.
Students offered a UC institutional private student loan should know that:
- Interest rates on UC loans will be fixed, not variable
- UC loans can have a range of interest rates
- UC loans are not awarded based on the credit history of the borrower
UC loans do not require a co-signer
Which Loans Can Be Consolidated?
Following loans are eligible for consolidation: Direct Loans (Subsidized, Unsubsidized and PLUS), Federal Family Education Loan Program/ FFELP Loans (Stafford, Unsubsidized Stafford and PLUS), SLS, HEAL and Perkins. We recommend that you leave Perkins loans out of your consolidation, not to lose your forgiveness options for this program.
Private (Alternative) education loans are not eligible for consolidation through Department of Education. Contact your private lender to find out what options exist if you find that your repayment is not manageable.
Who Can I Borrow A Private Loan From?
UC Office of the President evaluates many private lenders and prepares a list of preferred lenders. This makes it easier for our parents and students to select a lender for their educational loans and to compare the borrower benefits that are available. The preferred lender selection for private loans is based primarily on price and the borrower’s customer service experience.
In addition, UCLA Financial Aid and Scholarships 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.
UCLA’s private lenders’ lists can be found under ‘Forms and Publications’ at www.financialaid.ucla.edu.
Please read the Corbett Disclosure before you decide whether to apply for a private loan.
Will I Need A Co-signer For My Private Loan?
Generally there are two reasons why a consigner would be needed.
One reason is that the borrower does not have an established credit history, which leads to a low credit score. Having a cosigner will increase your odds of being approved for a private loan.
Another reason to apply with 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 8% interest rate and a 12% interest rate. 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!