Student Loan Information

Print this Page

Dream Loan Repayment

The Rules of Repayment

You repay your loan according to a repayment plan that you choose through your school or loan servicer servicer. The repayment plan you choose determines the amount you pay each month and the number of payments you must make.

You are not required to make payments while you are enrolled at least half-time or during the first six months after you leave school or drop below half-time enrollment.

The maximum time period over which you must repay your California Dream Loan is the repayment period. The repayment period can range from 10 years to 20 years, depending on your repayment plan and other factors. By keeping your repayment period as short as possible and by making your payments on time, you reduce the amount of interest you pay over the life of the loan.

Can I pay off my loan early? You may prepay all or part of your California Dream Loan at any time without penalty.

What are my repayment options?

The California Dream Loan offers to repayment options:

• Standard Repayment Plan
• Income-based Repayment Plan

The Income-based Repayment plan is designed to make your Dream Loan debt more manageable by reducing your monthly payment amount. If you would like to repay your California Dream Loan debt under the Income-based plan, you need to complete an application.

Repayment Plan Options for the California Dream Loan
Repayment Plan	Monthly Payment and Timeframe	Eligibility and Other Information
Standard Repayment Plan	Payments are a fixed amount that ensures your Dream Loan(s) are paid off within 10 years.	You will usually pay less over time than under the income-based plan.
Income-Based Repayment Plan	Your monthly payments will be 10 percent of discretionary income. Payments are recalculated each year and are based on your updated income and family size. You must update your income and family size each year, even if they haven't changed. If you're married, both your and your spouse's income or loan debt will be considered, whether taxes are filed jointly or separately (with limited exceptions). Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years.	Your monthly payment can be more than the 10-year Standard Repayment Plan amount. You may have to pay income tax on any amount that is forgiven.

Estimated Monthly Payment Amounts for California Dream Loans*
Debt when Loan Enters Repayment	Standard		Income-Based
			Single		Married
	Per Month	Total	Per Month	Total	Per Month	Total
$4,000	$50	$4,880	$16	$5,526	$0	$6,661
$8,000	$85	$10,182	$16	$12,928	$0	$6,960
$12,000	$127	$15,273	$16	$20,659	$0	$6,960
$16,000	$170	$20,365	$16	$20,659	$0	$6,960
$20,000	$212	$25,456	$16	$20,659	$0	$6,960

*The table above provides repayment estimates under the Standard and DREAM Loan Income-Based Repayment plans. These figures are estimates based on an interest rate of 5.05%, the DREAM Loan interest rate for the 2018-2019 academic year. The figures also assume an annual income of $20,000, family size of 1 for single borrowers and family sized of 2 for married borrowers, that you live in the continental U.S., and that your income increases 5% each year. Various factors, including your interest rate, your loan debt, your income, if and how quickly your income rises, and when you started borrowing may cause your repayment to differ from the estimates shown in these tables. These figures use the 2018 Poverty Guidelines and Income Percentage Factors

Remember! Choose the repayment plan that's right for you. You can select and change your repayment plan at any time. Contact your school or loan servicer to find out what repayment plans are available to you. If you do not select a repayment plan, your loan servicer will place you on the Standard Repayment Plan with fixed payments over a maximum of 10 years

Where do I send my payments?

When should I contact my loan servicer?

Contact your loan servicer if you:

• fail to begin classes at the school that determined you were eligible to receive your loan;
• do not begin classes as at least a half-time student for the loan period certified by your school;
• drop below half-time enrollment during the semester or term;
• transfer schools;
• leave school;
• graduate;
• change your name, address, or phone number;
• need help making your monthly Dream Loan payments;
• want to change or select a repayment plan; or
• are called to active duty with the U.S. armed forces for more than 30 days.

How do I change my repayment plan?

Contact your loan servicer or school to select or change your repayment plan. Your loan servicer or school can explain which repayment plans are available to you. However, if you do not select a repayment plan, your loan servicer will place you on the Standard Repayment Plan with fixed payments over a maximum of 10 years.

Deferment, Forbearance, and Cancellation

Deferment

• enrolled as an undergraduate or graduate student, at least half-time in a degree-seeking program at an eligible institution of higher education;
• engaged in graduate or post-graduate fellowship or rehabilitation from a disability program;
• experiencing unemployment (for a maximum of three years; and must be actively seeking, but unable to find full-time employment) which is documented to the satisfaction of the Lender, and the Lender agrees that you are unable to make the scheduled payments due;
• experiencing an economic hardship that is documented to the satisfaction of the Lender, and the Lender agrees that you are unable to make the scheduled payments due;
• serving on active duty in the U.S. Armed Forces
• meet other requirements that would qualify for deferment under the Federal Direct Loan Program.

Forbearance

• experiencing a prolonged illness;
• experiencing financial hardship;
• serve in local or state-operated AmeriCorps programs;
• meet other requirements that would qualify for forbearance under the Federal Direct Loan Program.

Note: Interest will continue to be charged during a forbearance. If you do not pay this interest, it will be capitalized at the end of the forbearance.

Cancellation

• full-time teacher in a public or other nonprofit elementary or secondary school or in a school or location operated by an educational service agency that has been designated by the Department in accordance with the provisions of section 465(a)(2) of the Act as a school with a high concentration of students from low-income families;
• full-time special education teacher in a public or nonprofit elementary or secondary school system, including a system administered by an educational service agency;
• full-time teacher, in a public or other nonprofit elementary or secondary school system who teaches mathematics, science, foreign languages, bilingual education, or any other field of expertise that is determined by the State Department of Education to have a shortage of qualified teachers in that State.;
• full-time qualified professional provider of early intervention services in a public or other nonprofit program under public supervision by a lead agency as authorized by section 632(5) of the Individuals with Disabilities Education Act. Early intervention services are provided to infants and toddlers with disabilities;
• full-time law enforcement officer for an eligible local, State, or Federal law enforcement agency;
• full-time corrections officer for an eligible local, State, or Federal corrections agency;
• full-time nurse providing health care services;
• full-time medical technician providing health care services;
• full-time employee of an eligible public or private non-profit child or family service agency who is directly providing or supervising the provision of services to high-risk children who are from low-income communities and the families of such children;
• full-time attorney employed in a defender organization established in accordance with section 3006(g)(2) of title 18, U.S.C.;
• full-time firefighter for a local, State or Federal fire department or fire district;
• full-time faculty member at a Tribal College or University, as that term is defined in section 316 of Title 20, U.S.C.;
• full-time librarian who has a master’s degree in library science and is employed in an elementary or secondary school that is eligible for assistance under part A of title I of the Elementary and Secondary Education Act of 1965, or who is employed in a public library that serves a geographic area that contains one or more such schools;
• full-time speech-language pathologist who has a master’s degree and who is working exclusively with schools that are eligible for assistance under Title I of the Elementary and Secondary Education Act of 1965;
• full-time staff member in the educational component of a Head Start program;
• full-time staff member in a pre-kindergarten or child care program that is licensed or regulated by the State;
• member of the Armed Forces of the United States in an area of hostilities that qualifies for special pay under section 310 of Title 37 of the United States Code;
• volunteer under the Peace Corps Act; or
• volunteer under the Domestic Volunteer Service Act of 1973 (ACTION programs).

Total and permanent disability discharge

Death

Defaulting on a Loan

What is default?

Default occurs when a borrower becomes past due in making the payments on his or her loans.

Maintaining a good credit history is an important responsibility of any borrower. It is extremely important and beneficial that you develop a habit of meeting your payment schedule.

If facing a large amount of debt, you may be tempted to skip or delay some of your student loan payments. Your loans are reported to a national credit bureau and are treated like any other form of credit. Remember, a poor credit report will negatively affect your financial reputation for many years; it could keep you from obtaining a car, a mortgage, or even a credit card. Moreover, your report could be requested and used as a basis for hiring by your employers You may have difficulty signing up for utilities, getting homeowner's insurance, getting a cell phone plan or difficulty getting approval to rent an apartment. Therefore, it is most important to do all you can to make your loan payments in a timely manner.

How will I know if I'm in danger of defaulting?

If you fail to make loan payments on time or if you default on your loans, the consequences are serious:

• You will lose eligibility for loan deferment and forbearance options.
• You will not be eligible for further institutional student financial aid.
• Your loan may be turned over to a collection agency who may initiate court action - litigation - to recover funds.
• Your loan will be reported as delinquent to credit bureaus, damaging your credit rating.
• Any future tax refunds, lottery winnings, or unclaimed property due to you by the State of California may be offset towards the amount owed. Late fees, additional interest, court costs, collection fees, attorney's fees and other costs may increase your total debt.

Don't let this happen to you!

Strategies for avoiding delinquency and default.

Borrow only what you need.

Borrow as a last resort and only borrow what you need. Money you don't borrow is money you don't have to pay back. Consider reducing the amount of money you borrow, if you can. You may request and borrow a lower California Dream Loan amount than you qualify for.

Plan ahead.

Keep in mind that you may have large one-time expenses, such as tuition or books, at the start of each year or semester.

Be aware that you may receive your funding, such as loan payments or grants, only a few times a year.

Pay for expenses with money you earn and save.

Control your education and non-education expenses.

• Which ones are vital and which ones are nice to have? Rank them and reduce the amount you spend on lower- priority expenses.
• Share housing or live at home.
• Buy used textbooks or rent textbooks.
• Take public transit or carpool.
• Lower your cell phone bill.
• Choose less expensive entertainment options.
• Try adjusting the expenses in your budget and see how it affects your need for income for the year.
• As much as possible, pay expenses with money you've earned and saved.

Finish your program and graduate.

Stay in touch with your loan servicer.

Pay on time.

Planning and Managing Your Finances

Use a Budget to Plan Expenses

Create a monthly spending plan and spend wisely.

• Gather details on your income and expenses.
• Set monthly spending limits.
• Pay with money you have, and track whether you exceed your spending limits.
• Pay your credit card balance in full each month.
• Pay your bills on time.

To complete an estimate of your budget, use the Salary and Budget Calculator.

1. Specify a Budget Period
   When developing a budget or using a planning worksheet, remember that all expenses and resources you list must be for the same period of time that reflects your academic period, such as 9 or 12 months.
   
   
2. Estimate Your Expenses
   To determine your expenses, you will need to collect some basic financial information. Your checkbook, school bills, and other monthly bills are good places to look for examples of your expenses. For other expenses such as personal items, clothing, and entertainment, keep a day-to-day record of your expenses for a month to help you make reasonable estimates.
   
   Tuition and fees generally do not change over a year and are considered fixed expenses. Other costs, such as housing, books, food, transportation, and supplies can change under different conditions and are called "variable expenses". You will need to gather amounts for each of these classifications of expense, making best-guess estimates for variable expenses.
   
   
3. Calculate Your Income
   To estimate your income for the time period, you will need to consider all of your resources. Use the same budget period that you used in figuring your expense budget, such as 9 months or 12 months.
   
   Include family assistance, grants and scholarships, savings, earnings, loans (including student loans for which you have been approved), and any other income.
   
   Your financial aid award letter, pay stubs, and bank account statements will help you in calculating your available resources.
   
   
4. Determine the remaining balance
   The difference between your income and your expenses determines any remaining balance. This balance helps you to decide if you actually need all the loan money you are eligible to borrow.
   
   Negative Balance
   If the balance is a negative dollar amount, you do not have enough resources to cover your expenses. You will need to explore new financial resources and re-evaluate your expenses with a goal of reducing them. Many expenses depend on individual lifestyles and can be adjusted to reflect your available resources.
   
   You may also consider meeting with a staff member in the Office of Student Financial Aid to review other options, such as other sources of financial aid for which you qualify.
   
   Positive Balance
   If the balance is a positive dollar amount meaning that your total resources are greater than your total expenses--then you should also see a financial aid counselor. You may be able to reduce the amount of your loans, even if you've already received some of the funds. Remember that if you can lower the amount you borrow now, you will have less to repay later.

Your Credit and Identity

• Equifax
• TransUnion
• Innovis
• Experian

• how promptly you pay your bills,
• the total amount of debt you owe, and
• how many credit cards you have.

Maintain a good credit score:

• Review your credit report. You are entitled to check your credit report once per year for free. Learn more at https://www.annualcreditreport.com/index.action.
• Contact credit bureaus to correct inaccurate information.
• Pay all bills on time, including Dream Loan payments.
• Keep your debt-to-income ratio as low as possible.

Tips on protecting your credit and identity:

• Never give your personal information (e.g., Social Security number or ITIN, date of birth, account numbers, etc.) to an individual or business with which you did not initiate contact.
• Store documents containing your personal or financial information in a safe location and shred unnecessary documents.
• Protect your passwords.
• Monitor your bank and credit card statements.
• Avoid costly credit card interest charges by using your credit card to charge only what you can afford to pay off completely at the end of the month.
• Search for the lowest annual interest rate (APR) and fees on credit cards and loans.
• Limit the number of credit cards you hold.
• Limit other borrowing, and reduce the amount you borrow for large purchases (e.g., a car) by planning ahead and saving for those purchases in advance.
• Read the fine print in every credit card and loan agreement.

Credit Cards & Other Borrowing

Credit Cards

• Spend only what you can pay back immediately.
• Pay your balance in full each month to avoid interest and fees.
• Look for the lowest annual interest rate (APR ) and fees.
• Read the fine print!
• Limit your number of credit cards.

Visit Money Matters and MyMoney.gov for more information on how to choose a credit card.

Other Borrowing

To reduce the amount borrowed for large purchases (e.g. a car):

• Plan ahead, and try to save for large purchases.
• Borrow only what you can afford to repay. (Use the calculator in the previous topics)
• Look for low interest rate and fees.