Although California College of the Arts may have determined that you and, if applicable, your parent(s) are eligible to borrow a Perkins, Direct Loans, or PLUS loan, you are under no obligation to accept any loan. Declining a loan will neither jeopardize other financial aid offered to you nor will it prevent you or your parent(s) from borrowing later in the term or in the future.

An educational loan is a serious financial obligation and must be repaid. Defaulting on any loan will seriously damage your credit rating. Complete information on educational loan repayment is available within the Financial Aid Office.

Federal Perkins Loan

Awarded to students with exceptional financial need, a Perkins loan carries an annual interest rate of 5 percent. However, interest does not accrue while the borrower is enrolled in school at least half time, during the grace period (the time before which the borrower must begin or resume repaying a loan), or during authorized deferments.

The borrower is responsible for paying the interest that accrues on the loan during repayment or forbearance (a temporary postponement of payments). Loans are repayable over a period of up to 10 years and have a nine-month initial grace period. Availability is limited.

Federal Direct Loans

Direct Loans are low-interest federal educational loans available to college students who are enrolled at least half time, are pursuing a degree, and meet other basic requirements for federal aid. Subsidized and unsubsidized Direct Loans do not require credit approval and offer a variety of deferment and repayment options.

Direct Loans are financed directly by the U.S. government, so you do not need to choose a lender. All CCA students borrowing a Direct Loan must complete a Master Promissory Note (MPN) and a loan entrance counseling session prior to the disbursement of loan funds.

Direct Loans can be subsidized or unsubsidized. The federal government pays the interest on subsidized loans while the borrower is enrolled at least half time and during authorized periods of deferment. Beginning with the Fall 2012 semester, subsidized loans are only available to undergraduate students. The interest on unsubsidized loans begins to accrue immediately upon disbursement and is generally capitalized (added to the principal amount borrowed) when the borrower is no longer enrolled at least half time.

Eligibility for subsidized Direct Loans is based on financial need as demonstrated via the FAFSA. Students who do not demonstrate sufficient need may borrow unsubsidized Direct Loans.

Independent and dependent undergraduate students may borrow combined subsidized and unsubsidized Direct Loan amounts not to exceed an annual total of:

• $5,500 for first-year students (a maximum of $3,500 may be subsidized)
• $6,500 for second-year students (a maximum of $4,500 may be subsidized)
• $7,500 for third-, fourth-, and fifth-year students (a maximum of $5,500 may be subsidized)

Independent and dependent undergraduate students whose parents are unable to borrow PLUS Loans (see below) may borrow additional unsubsidized Direct Loan amounts not to exceed an
annual total of:

• $4,000 for first- and second-year students
• $5,000 for third-, fourth-, and fifth-year students

Graduate students may borrow up to $20,500 per year through the Direct Loan program.

The maximum outstanding total subsidized and unsubsidized Direct Loan debt is:

• $31,000 for dependent undergraduate students
• $57,500 for independent undergraduate students (or dependent undergraduate students whose parents do not qualify for PLUS Loans). No more than $23,000 of this aggregate amount may be in the form of subsidized loans.
• $138,500 for graduate or professional-degree students (including loans for undergraduate study). No more than $65,500 of this aggregate amount may be in the form of subsidized loans.

The interest rate on subsidized Direct Loans disbursed between July 1, 2013, and June 30, 2014, is fixed at 6.8 percent for all students once the student enters the repayment period. The interest rate on unsubsidized Direct Loans disbursed between July 1, 2013, and June 30, 2014, is fixed at 6.8 percent all students and interest begins at the time of disbursement.

The interest rate on subsidized Direct Loans disbursed between July 1, 2012, and June 30, 2013, is fixed at 6.8 percent for graduate students and 3.4 percent for undergraduate students once the student enters the repayment period. The interest rate on unsubsidized Direct Loans disbursed between July 1, 2012, and June 30, 2013, is fixed at 6.8 percent for graduate and undergraduate students.

For 2013–14, subsidized and unsubsidized Direct Loans have an initial origination fee of 1.0 percent of the principal amount of the loan. This fee will be deducted from each disbursement of each loan. The standard repayment period under this program is 10 years.

Note: Beginning July 1, 2012 the in-school interest subsidy for graduate and professional students has been eliminated as well as repayment incentives and up front interest rebates.

See Financial Aid Changes for updated information.

Federal Direct Parent & Graduate PLUS Loans

Parent PLUS Loans are available to the parents or stepparents of dependent undergraduate students. Graduate and professional students are eligible to take out graduate PLUS Loans on their own behalf. These credit-based loans are not determined by financial need. PLUS Loans are financed directly by the U.S. government, so you do not need to choose a lender. Parents and graduate students borrowing PLUS Loans must complete a PLUS or graduate PLUS Master Promissory Note (MPN), respectively. Parents of dependent undergraduate students must also complete the PLUS Loan request form.

The interest rate on parent and graduate PLUS Loans disbursed between July 1, 2013, and June 30, 2014, is fixed at 7.9 percent. There is no annual limit to the amount that can be borrowed through the PLUS Loan program. In general, parents and graduate students may borrow up to the cost of attendance less any other financial aid received. Parent and graduate PLUS loans have an initial origination fee of 4.0 percent of the principal amount of the loan. This fee will be deducted from each disbursement of each loan.

The standard repayment period under this program is 10 years. Interest is charged on parent PLUS and graduate PLUS Loans beginning on the date of the first loan disbursement. Repayment of the principal and interest on a parent PLUS Loan begins within 60 days after the loan is fully disbursed. Parents may request an in-school forbearance from Direct Loan Borrower Services during which no payments, or interest-only payments, are required. Graduate PLUS Loan borrowers attending at least half time will be placed into in-school deferment, during which no payments are required. Interest on parent PLUS and graduate PLUS Loans continues to be charged during periods of deferment or forbearance. You may either pay the interest as it accrues or you may allow the interest to be capitalized (added to your loan’s principal balance). Capitalization increases the total loan amount that you must repay.

Alternative Loans

If the combination of federal loans and CCA-administered financial aid does not meet the financial need of a student, "alternative loan" programs should be a consideration. These private-educational loan programs require the borrower to have a satisfactory credit history and, in some cases, can require a credit-worthy cosigner.

See also the alternative loan section.