Before You Borrow

Important News

Before You Borrow. . .

Know The Types of Loans You Are Borrowing

Over the course of your time in school you may borrow a combination of different types of loans: Stafford Loans, Federal Direct Stafford Loans, Perkins Loans, and University Student Loans are separate loan programs that may require you to make separate, simultaneous loan payments upon graduation. It's important to know the type of loan you are accepting and the loan payment requirements. Before you graduate, look into Direct Loan Consolidation Online for the lowest rate possible when it comes time to pay back your loans.

All first-time borrowers must receive Entrance Loan Counseling before funds are disbursed. The types of loan you are being offered will appear on your Financial Aid Notice. Loans must be repaid after graduation or withdrawal from school, and some loans require payment while you are still in school. We encourage you to think carefully about your future loan indebtedness before accepting loans. You are not obligated to accept any loan offered to you, and you can decline the aid offered on the Financial Aid Notice. When you are approaching graduation, and before you leave school, you will be required to attend an Exit Interview to assess your total loan indebtedness and to determine your repayment schedule.

Loan Fees and Repayment Requirements

As a borrower, you will be charged a loan fee when you borrow Federal Direct Stafford Loans. The fee is 2.5% (2% after July 1, 2008), which is deducted proportionately from each disbursement of your loan. After you graduate, leave school, or drop below half-time enrollment, you have a grace period before you begin repayment. During the grace period on an unsubsidized loan, you don't have to pay any principal, but interest will be charged. You can either pay the interest or allow it to accumulate. Every educational loan you receive will require that you sign a Promissory Note, in which you will agree to the interest rate and repayment requirements required for the loan.

Grace Period

The grace period is the amount of time you have after you graduate, withdraw, or drop below half-time, before you are required to begin repaying your loan. Not all grace periods are the same amount of time, it depends on the terms of the loan you are borrowing. Be sure to read the Promissory Note for the loan you are accepting so that you are aware of the grace period for that particular loan. For the Direct Loan program, the grace period is six months. During the grace period on an unsubsidized loan, you don't have to pay any principal, but interest will be charged. You can either pay the interest or allow it to accumulate. For the Perkins Loan program, the grace period is nine months. Beginning July 1, 2007, the grace period for students who graduate or withdraw after attending only Summer Session 1 will begin on 9/1 of that year. For students who attend either Special Summer Session, or Summer Session 2, the grace period will begin on 10/1 of that year.

Requesting Additional Loan to Meet Your Student Self-Help Contribution

The amount of loan you can borrow to meet your Student Self-Help Contribution depends on the amount of loan you have already received for the academic year. If you have been awarded the maximum amount of subsidized Direct Loan allowed for your grade level, you may be able to borrow unsubsidized or Direct PLUS loans only.

Dependent students may borrow Subsidized Direct Loan only up to the maximum amount approved for their grade level. Unsubsidized Direct Loan up to $2,000 may be requested, if eligible.
The dependent student's parents may choose to borrow Direct PLUS loan to meet the Self-Help Contribution. If the PLUS loan is denied because of an adverse credit history, the student is then eligible to borrow additional Unsubsidized Direct Loan.
Independent students may borrow Unsubsidized Loan to meet their Self-Help Contribution by completing and submitting the Unsubsidized Loan Request Form.

Request Only The Amount of Loan You Need

You should never borrow more than you need. The minimum amount of Direct Loan we will authorize is $200. When you accept a student loan, read about your rights and responsibilities on eFAN (UC Davis electronic Financial Aid Notice) before you accept a loan.

Canceling Your Loans

At any time before the loan money is disbursed or after it has disbursed a student can decline all or part of the loan money by notifying the UC Davis Financial Aid Office in writing. The student's name, I.D. number, and the amount of loan money they wish to return should be included on the letter/statement. The letter should be sent to Financial Aid Office, UC Davis, One Shields Avenue, Davis, CA 95616-8596. If the loan is canceled after disbursement, this will create a balance due on your student account.

Protect Your Credit, Pay Back Your Loans

When you receive a student loan it becomes part of your credit file. Repaying your loan according to the agreed schedule may give you a head start when you apply for more credit in the future. If you become disabled or are experiencing economic hardship due to unemployment, be sure to contact your lender about loan deferment options. Before signing your promissory note, take time to estimate your monthly loan payments after graduation.

Federal Student Aid (FSA) Student Loan Ombudsman

The FSA Student Loan Ombudsman works with student loan borrowers to informally resolve loan disputes and problems. Their goal is to facilitate and provide creative options/alternatives for borrowers needing assistance with loan disputes with any of the following loan programs: Subsidized and Unsubsidized Federal Direct Student Loans, Direct PLUS Loans (for parents), and Direct Consolidation Loans; Federal Family Education Loans—Subsidized and Unsubsidized Stafford Loans, FFEL PLUS Loans (for parents), and FFEL Consolidation Loans; Guaranteed Student Loans, SLS Loans; and Perkins Loans.