LOANS

Loans can be very helpful for students and families in managing college costs because they help spread the cost of education out over a longer period of time. However, the Office of Financial Aid strongly encourages students and families to carefully weigh the need for loans and to borrow only what they actually need as loans must be repaid with interest.

Loans are a form of financial aid that must be repaid. The Federal Government is the biggest lender of educational loans, but there are private lenders as well. The Federal Direct Loan program has loan options for both students and parents of dependent students. In order for the student to be eligible for federal loans, a FAFSA must be submitted. Private loan borrowers are not required to submit a FAFSA, but we recommend doing so as the terms and conditions of the federal loans may be more favorable to the student than a private loan.

All loans carry a repayment obligation. Students must repay their loans even if they do not finish their degree or they are not satisfied with their program.

Click on the links below for specific information on type of loans:
Federal Direct Subsidized/Unsubsidized Stafford Loans
Federal Direct Parent PLUS Loan
Federal Direct Graduate PLUS Loan
Private Loans

Responsible Borrowing

Dominican University of California and the Office of Financial Aid urge student borrowers and their families to carefully consider whether the need to borrow and only to borrow the minimum amount needed. Loan balances can quickly add up over the years and borrowers must keep in mind from day one the obligation to repay and whether the borrower will have the resources to payback the loans. For more information about managing student loan debt, students can visit our Debt and Default Management page.

Federal Loans versus Private Loans

Borrowers should compare the terms and conditions of any loans carefully to make sure the loan is the best fit for their financial situation.  By law, borrowers of federal loans are guaranteed certain flexible repayment options and loan forgiveness benefits that private lenders are not required to provide. Here are some other key points to consider when comparing federal loans with private loans.


Federal Loans

Private Loans

Co-Signer Required?

Stafford Loan: No
Graduate PLUS Loan: Usually no
Parent PLUS Loan: Usually no

Usually yes

Credit Check Required?

Stafford Loan: No
Graduate PLUS Loan: Yes (limited)
Parent PLUS Loan: Yes (limited)

Yes

Deferment Options

Several options guaranteed by law

Depends on program

Grace Period

Stafford Loan: 6 months
Graduate PLUS Loan: 6 months
Parent PLUS Loan: 6 months (must opt-in)

Depends on program

Interest Rate

Fixed

Fixed or variable

Loan Fees

Stafford Loan: Approximately 1%
Graduate PLUS Loan: Approximately 4%
Parent PLUS Loan: Approximately 4%

Depends on program

Loan Forgiveness Options

Several options guaranteed by law

Generally none

Penalties for Early Repayment

None

Depends on program

Interest Rates

Loan Type

APR

Stafford Subsidized/Unsubsidized Loan (Undergraduate)

4.45%*

Stafford Unsubsidized Loan (Graduate)

6.0%*

Graduate/Parent PLUS Loan

7.0%*

Private Loans

TBD by the lender, based on credit rating of borrower and co-signer (if applicable)

*for any federal loans disbursed between 7/1/17 - 6/30/18

The Federal Government establishes the interest rates (APR) for the Stafford and PLUS Loans well before the start of the academic year so students can compare the federal and private loans. Often-times, the APR on federal student loans is lower than private loans. Since private loans are credit dependent, the APR offered will depend on the borrowers' (and their co-signer's, if applicable) credit rating and history.

Interest rates can either be fixed or variable. The Federal Government only offers fixed rate loans to students and parents, while private lenders may offer either fixed or variable rate products. A fixed rate means the APR stays the same throughout the life of the loan. For example, a Stafford Loan taken during the 2017 - 2018 academic year will remain at 4.45% until the loan has been paid in full. A Variable APR is linked to a particular financial market index. As the index rises and falls, the APR assessed will rise and fall over time. So while a variable rate may start at an interest rate lower than a fixed rate, it may rise over time and end up higher than a fixed rate.

Deferment and Repayment

Regardless of whether a loan is borrowed from the Federal Government or a private lender, all loans must be repaid. The only question is when or how long it will take. Federal loan borrowers have the option to defer payment while the student is enrolled and for 6 months after the student drops below half-time enrollment (by taking less units, graduating, taking a leave of absence, or withdrawing from the University). During this time, the student is not required to make payment (although it's recommended that you do!) Once the deferment and grace period end, repayment of the principal will begin. By law, federal loans have a number of flexible repayment plans, but the standard repayment plan takes place over the course of 10 years (120 payments). For information regarding the other repayment plans, please visit Federal Student Aid or contact your loan servicer.

On the other hand, most private lenders are not required to offer deferment or flexible repayment options. Most lenders do not offer loans with deferment, although some may offer the option. If deferment is not offered, repayment would begin immediately upon disbursement of the loan. Typically, the repayment plan is set and cannot be changed. Borrowers would need to contact their lender for any additional information.

Disbursement of Loans

Disbursement is when money from a loan transfers from the lender to the University. Disbursement begins during the first week of the Fall and Spring semesters and during the last week of June for the Summer semester. Loan disbursements will post directly to the student's account.

Cancelling or Reducing a Loan

Students are not obligated to accept either federal or private loans after being awarded. Students have the right to cancel or reduce the amount of any federal loan at any time before the loan disburses. Private loans generally function in the same manner, but please check with your lender for any specific policies regarding cancellation. Once a loan has disbursed, students have up to 30 days from the date the Office of Financial Aid sent notification that the loan has disbursed to cancel.

Required Loan Disclosures (SB 1289)

Students considering student loans need to be aware of the differences between federal student loans 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. Other qualification criteria do apply. For more information, please visit 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 rating.
  • Private student loans have a range of interest rates and fees and 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 university campus' financial aid office if they have any questions about a private student loan.