Federal Loans are a type of financial aid that must be repaid, generally after the student graduates or drops below 1/2 time enrollment. Unsubsidized and PLUS loans accrue interest from the time funds are disbursed to the student. Loan limits, interest rates and repayment terms are subject to change on a yearly basis.
Federal Direct Loan Program
Via the Federal Direct Lending program, the Department of Education acts as a lender, providing funds for Subsidized, Unsubsidized and PLUS loans.
Federal Direct Loans are available to students whose cost of attendance has not been fully met through other aid. Payments may be deferred during the time of enrollement. A student must be enrolled in at least six credits of undergraduate or four credits of master's degree coursework to be eligible and to retain deferred status. Loan funds cannot be released if you have dropped below half-time status, have not made satisfactory progress or have any university holds.
Types of Direct Loans:
The Subsidized Loan is available only to students with financial need. During the time recipients are in school (enrolled half time or more), the federal government will pay the 5.6% interest rate. Repayment of interest and principle begins six months after the student is no longer enrolled at least half time.
The Unsubsidized Loan has the same repayment terms as the Subsidized Loan, however, the interest rate is 6.8%, and the federal government does not pay the interest while students are in school. Consequently, interest is billed onto the loan beginning the 1st day of disbursement. Payments may be deferred, but the interest accrued while you are in school is added to the amount borrowed.
The federal government has set the following annual limits for Subsidized and Unsubsidized Loans:
- Freshman (0-29 earned credits) ~ $3,500
- Sophomore (30-59 earned credits) ~ $4,500
- Junior, Senior and Teaching Credential (60+ earned credits) ~ $5,500
- Graduate Student ~ $8,500
In addition to the loan amounts above, if you qualify as independent, you may also borrow an additional Unsubsidized Loan. Please note: Additional Unsubsidized Loan limits applicable to undergraduate students have increased by $2,000 for loans disbursed after July 1, 2008. Eligibility is limited by the amount of your cost of attendance and is determined by subtracting any financial aid resources received from your costs of education. If an undergraduate student graduating in December, you are also limited to prorated amounts based on the number of credits for which you are enrolled.
The annual loan limits for the additional Unsubsidized Loan after July 1, 2009 are:
- Freshman (0-29 earned credits) ~ $6,000
- Sophomore (30-59 earned credits) ~ $6,000
- Junior, Senior (60+ earned credits) ~ $7,000
- Second Bachelor's Degree and Teaching Credential ~ $7,000
- Graduate Student ~ $12,000
The aggregate limits for dependent undergraduates is: $31,000 (no more than $23,000 of which can be subsidized). The aggregate limits for independent undergraduates, second bachelor's and teaching credential programs is $57,500 (no more than $23,000 of which can be subsidized). The aggregate limits for graduate degree seeking student (including amounts borrowed for undergraduate study) is $138,500 (no more than $65,500 of which can be subsidized).
Dependent students are not eligible for additional unsubsidized loans unless their parent/guardian applies for and are denied the PLUS loan (see below).
Disbursement of Loan Funds
If your award includes a loan that you wish to accept, you must log onto your CMS student account to accept your loan. If you are a first time borrower, the federal government requires that you complete Loan Entrance counseling and a Master Promissory Note prior to receiving your first loan disbursement. You can complete loan entrance counseling on the direct lending website.
Exit loan counseling is also required for all Direct Loan borrowers. You must contact the Financial Aid Office within 30 days from the date that you graduate, withdraw or drop below half-time status and complete exit counseling on the direct lending website.
All loans are issued in two installments, even if you are attending for only one semester. For academic-year loans, the second disbursement will be released at the beginning of the spring semester.
Upon receiving Federal Student Loan funds, they must be disbursed to the student account within 30 days. If there is a hold on your student record that prevents CSUMB from releasing the loan, CSUMB will send you written notification regarding your disbursement. You must respond before the date designated in that letter, or funds will be returned to the federal government.
If applicable, Direct Loan funds may be used to pay any outstanding charges owed to the university including registration fees, tuition, housing and miscellaneous charges.
Assumption Program of Loans for Education
The APLE program helps students who become teachers to repay their Federal Loans if they teach in California's public schools in designated areas. You should apply as soon as you have achieved junior status but no later than the year before completing your credential program. Applications are available in late March of each year.
Parent Loan for Undergraduate Students
PLUS Loans are available to parents of dependent students. The interest rate is fixed at 7.9 percent.
Repayment begins 60 days of the date the loan is fully disbursed. The minimum monthly payment is $50 and the repayment period is 10 years, except that borrowers with balances over $30,000 can receive a repayment period of up to 25 years.
PLUS amounts are determined by subtracting all financial aid awarded from the student budget. All parent borrowers must undergo a credit check and can be denied the loan if an adverse credit history is found. However, most resolved credit issues are disregarded. If approved, all PLUS funds are sent to CSUMB in two installments and are made payable to the student. Loan funds cannot be released if the student has dropped below half-time status, has not made satisfactory academic progress, or has any university holds. PLUS funds may be used to pay any outstanding charges owed to the university including registration fees, tuition, housing and miscellaneous charges.
To apply for a PLUS loan, parents must complete a PLUS loan application available under the Forms section of the Financial Aid website.
Private loans are funded by banks and other private lending institutions. For some, these loans serve to bridge the gap between the cost of their education and the amount the government allows students/parents to borrow through federal loan programs (Subsidized, Unsubsidized and Parent/Grad PLUS). Terms and conditions are generally not as favorable as those for federal loans, however, we understand that private educational loans are an essential source of financial assistance for many of our students.