Loans

The University administers a number of loan programs to assist students and parents with college costs. Most loans offer below-market interest rates and must be repaid over a period of several years, beginning six to nine months after the student stops attending school or ceases to be at least a half-time student. Federal loans available to students from low- and moderate-income families include Perkins loans and subsidized Stafford loans. Unsubsidized Stafford loans are available to students at any income level. The PLUS program (Parent Loans for Undergraduate Students) provides creditworthy parents with the means to finance their expected contribution.

Perkins Loan Program

This federal loan program is administered by the University. Repayment at 5 percent interest begins nine months after the student ceases to attend school at least half time.

Stafford Loan Program

Under the Stafford loan program, students may take out federally insured loans from either the federal government, if the student attends a UC campus participating in direct lending; or banks, credit unions, and savings and loans, if the school participates in the Federal Family Educational Loan Program (FFELP). The interest rate is variable, tied to a federal index and capped at 8.25 percent. In 2005–2006, the Stafford loan interest rate for borrowers in repayment is at 5.30 percent. Repayment begins six months after the student graduates, withdraws or attends school less than half time. Students who demonstrate financial need are eligible for the subsidized Stafford loan. The federal government pays interest that accrues while the student is in school.

Unsubsidized Stafford loans are available to students who do not qualify for need-based financial aid. The student is responsible for interest that accrues while he or she is attending school; however, payment of interest may be deferred until after the student graduates, withdraws or attends school less than half time. If interest is deferred, it is added to the principal, increasing the amount on which future interest is calculated.

Parent Loans for Undergraduate Students (PLUS)

PLUS loans are federally insured loans made to parents of dependent students. Borrowers must file a FAFSA and must not have negative credit; a supplemental credit application is required

The interest rate for PLUS loans is variable, tied to the rate for Treasury Bills and capped at 9 percent. The 2005–2006 interest rate for PLUS loans is 6.10 percent. The borrower is responsible for payment of interest and principal while the student is in school, although parents can request interest-only payments while the student is in school.

University Loans

Some UC campuses offer University loans. The interest rate ranges from 5 to 9 percent, depending on the campus. Repayment usually begins six to nine months after the borrower ceases to be at least a halftime student. Some campuses also offer short-term emergency loans to help students through temporary difficulties.