Paying For College, Student Loans |
To qualify for Public Service Loan Forgiveness (PSLF), you must make 120 total monthly payments while:
- Enrolled in an Income-Driven Repayment Plan
- Have Federal Direct Loans or have consolidated other federal student loans
- Working full-time for a government agency or certain types of nonprofit organizations
Before Graduating or Immediately Upon Graduation – check these eligibility requirements first and early on to plan for Public Service Loan Forgiveness:
- Check what kind of loan you have by logging in to www.StudentAid.gov.
- Confirm that you have a Federal Direct Loan that is not in default. This is the only federal loan that is eligible for PSLF.
- If some of your federal student loans are not Direct Loans (FFEL and Perkins Loan), they need to be consolidated to qualify; this is likely your situation if you borrowed before 2011. Payments on FFEL or Perkins Loans made before you consolidate will not be counted. Depending on your circumstance there may be pros and cons to consolidating in order to apply for PSLF.
As You Start Working in Public Service – Document Your Employment Using the PSLF Application Form:
- Submit a PSLF application form every year or when you change employers. You’ll want to have documented every qualified employer where you worked while you made a payment towards PSLF. Especially if you have multiple public service employers.
- Make sure that your PSLF application form has all required fields completed. Incomplete forms or inconsistencies may affect your eligibility. If you do not meet a PSLF qualification, the response letter to your application will provide more information.
- Make sure you have all the information required: employer’s address, Employer Identification Number (EIN) which can be found on your Wage and Tax Statement (W-2), and consistent info with your previous application.
As You’re Working in Public Service – Submitting your forms using the PSLF Help Tool:
- Log in with your FSA ID. The tool will import your loan info automatically.
- The Tool will ask a series of questions to confirm you’re on the right track to loan forgiveness and that your employer qualifies for PSLF.
- Find out if your loans qualify and options available to you if they don’t.
- Get a signature from an “authorized official” at your employer, typically someone in your human resources office.
- Print and mail your completed form. Save and archive your documentation (PSLF application, response letters from FedLoan Servicing, and employment documents) in case there are any discrepancies.
After Working at Least 10 Years in Public Service – Applying for PSLF and Getting Your Loan Forgiven:
- Upon making your 120th payment you’re ready to apply for PSLF. You must still be working for a qualified employer when you submit your application.
- Gather your current employer information and any documentation used to prove previous employers qualified while you made payments towards PSLF.
- Complete and submit the PSLF application by using the PSLF Help Tool (see above), by mail, or fax.
- If your PSLF application is approved, then all remaining balance including interest and outstanding principal will be forgiven. Any payments made after the required 120 will be refunded as well.
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Paying For College, Student Loans |
What Are Income-Driven Repayment Plans?
Income-Driven Repayment (IDR) can make monthly payments more affordable for borrowers with lower income. In an IDR Plan monthly payments are calculated as a percentage of ‘discretionary income’ based on income and family size. If your income increases while on an IDR plan, your payments can increase. Conversely, if you lose income perhaps due to losing your job, your monthly payment can be reduced to $0.00. After completion of an IDR Plan, any remaining debt may be forgiven. Below is a chart with how different IDR Plans monthly payments are calculated and an estimated timeline for the plan.
| Different IDR Plans |
How is my monthly payment calculated?
*percentage of “discretionary” income* |
How many years can I stay in the plan for?
*any remaining debt is forgiven after completing these timeframes* |
| Revised Pay as You Earn (REPAYE) |
10% |
20-25 years |
| Pay as You Earn (PAYE) |
10% |
20 years |
| “New” Income-Based Repayment (IBR) |
10% |
20 years |
| Income Based Repayment (IBR) |
15% |
25 years |
| Income Contingent Repayment (ICR) |
20% |
25 years |
When Do I Sign Up For an Income-Driven Repayment (IDR) Plan?
After your 6-month grace period ends (when you leave your higher education program or graduate) you will automatically enter the 10-year Standard Repayment Plan. You can enroll in an IDR Plan at any time when you are paying off your student loans.
To remain in an IDR plan, you must recertify your income and family size with your servicer annually. If you don’t recertify by your specific deadline, your monthly payment will increase to the amount you would pay under the 10 year Standard Repayment Plan.
If you don’t recertify your income by the annual deadline any unpaid interest will be capitalized (added to the principal balance of your loans). This will increase the total cost of your loans over time because you will then pay interest on the increased loan principal balance.
Borrowers who fail to recertify can still reenter an IDR plan at any time. And, borrowers can recertify their income at any time if they need to adjust their payments due to loss of income or job.
What Happens If My Income Increases Under the Income-Driven Repayment (IDR) Plan?
If your income ever increases to the point that your calculated monthly payment amount would be more than the 10-year Standard Repayment Plan, you’ll remain on the IDR plan, but your payment will no longer be based on your income.
Instead, your required monthly payment will be the amount you would pay under the 10-year Standard Repayment Plan, based on the loan amount you owed when you first began repayment. Again IDR Plans are especially beneficial to borrowers who are lower-income or may have become unemployed.
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Financial Aid For Undocumented Students, Paying For College, Submitting FAFSA |
FAFSA vs. Dream Act: What’s the Difference?
Money is one of the biggest deciding factors for incoming college students. Depending on how much aid students are able to receive, it then shifts what college they attend, how many semesters they will attend, how much they will loan, etc. Immigrant Rising’s FAFSA vs Dream Act info sheet gives a quick overview of the differences between FAFSA and the Dream Act as to what they are, who can apply, and the requirements for each. Below is some FAQ’s that can help you decide which aid to apply for!
Who is eligible?
FAFSA
- Citizens
- Legal Permanent Residents
- Eligible Non- Citizens (per FAFSA)
- T visa holders
DREAM Act AB 540/ SB 68 Eligible Students Who Are:
- Undocumented individuals;
- DACAmented individuals; and U visa holders
- TPS Protected Status
Who is NOT eligible?
FAFSA
- DACAmented students
- Undocumented individuals
DREAM Act
- Any visa holder (except U)
- Citizens
- Legal Permanent Residents
- Eligible Non-Citizens (per FAFSA)
Requirements for Financial Aid to be Awarded:
FAFSA
- Department of Homeland Security and SocialSecurity Administration crosscheck student name, social security number, and birthdate to verify that all FAFSA eligibility requirements are met;
- All other eligibility for federal and state aid is met
DREAM Act
- School verifies student meets AB 540/ SB 68
- Some schools may require a student’s AB 540/ SB 68 status to be approved prior to awarding state financial aid
- All other eligibility state aid is met
Requirements for Financial Aid to Be Released to Pay Outstanding Balances:
FAFSA
- Admission into an approved degree or certificate degree
- Minimum Unit requirements
- Satisfactory Academic Progress
DREAM Act
Approval as AB 540/ SB 68 student and:
- Admission into an approved degree or
- Minimum Unit requirements
- Satisfactory Academic Progress
For more information visit FAFSA vs CA Dream Act – Apply to the Correct Financial Aid in CA!
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Paying For College, Submitting FAFSA |
For a student who is a citizen or legal permanent resident but whose parents are undocumented, you must follow specific steps to ensure you will be considered for federal aid through FAFSA.
- Paying Resident Fees at a CCC, CSU, or UC Submitting the FAFSA Application
-
- When students are financially dependent on their parent(s), Residency for Tuition Purposes in CCCs, CSUs, and UCs can be based on the residency of the parents when the student is under a specific age.
- However, students who are citizens, legal permanent residents, or eligible non-citizens but whose parents are undocumented should be classified as residents in most instances if their parents meet all other residency requirements for tuition purposes. Keep in mind that this is a complicated process and not all students are accurately classified.
- If you are classified as a non-resident but believe that you meet the residency requirements for tuition purposes in CA, contact the residency officer at your campus. If you are unable to resolve it at that level, contact the Chancellor’s Office of the CCC, CSU, or the President’s Office of the UC regarding their policy on residency for students who are U.S. citizens with undocumented parents.
- If you cannot be classified as a resident, check to see if you meet the eligibility for AB 540/SB 68 and submit the nonresident tuition exemption form (AB 540 affidavit), along with any required proof (transcripts).
- Being classified as a resident for tuition purposes or AB 540/SB 69 student is key to paying resident fees and being able to receive state-based financial aid.
- Submitting the FAFSA Application
-
- Students who are citizens, legal permanent residents, or eligible non-citizens, but whose parent(s) is/ are undocumented are eligible to submit the FAFSA application and receive federal financial aid.
- Students should apply at fafsa.ed.gov but should pay attention to these specific details if their parents are undocumented:
- Students should obtain their own FSA ID
- Parent(s) should include their information, if required
- Parents should be sure to use 000’s for the Social Security Number (SSN) if they do not have a valid SSN. They should not use an Individual Tax Identification Number (ITIN). The application will request confirmation if you use zeros. Say yes.
- Students should sign the FAFSA with their FSA ID and parents should “Print signature page” to sign the FAFSA because they cannot obtain an FSA ID
- Students should save one copy of the signature page and mail the other to FAFSA. It can take up to six weeks to process, so be sure to send it early!
- Students should check on www.fafsa.ed.gov to confirm that the parents signature has been received. The student’s FAFSA application cannot be processed until the parents signature is successfully added.
- Receiving Federal and State Financial Aid at a CCC, CSU, or UC
-
- Students who filled out the FAFSA but were admitted as non-residents usually do not see CA state financial aid in their original financial aid award–only federal financial aid. Once approval of their residency classification or AB 540 status is approved, students must contact the Financial Aid department to ensure that all state financial aid for which they are eligible is added to their financial aid award.
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Paying For College, Student Loans |
Paying for college can seem intimidating, but after calculating your net price, you’ll get a better sense of your education’s affordability. Though you may receive grants, scholarships, and other money you do not have to pay back, you may have to take out loans to pay for school.
What exactly is a loan?
Simply put, a loan is money that is borrowed. Unlike your grants and other aid, you will eventually have to repay your loan. That said, there are varying types of loans that have different terms and conditions. This article will cover the most common types of college loans.
Federal subsidized loan
After reviewing your FAFSA application, your school may offer you a subsidized loan if they deem you high-need. The amount they offer you will depend on the rest of your financial aid package. They will never offer you a subsidized loan that exceeds the cost of your school’s attendance.
With a subsidized loan, you are not required to pay interest while you are a student (half time or more). After you graduate, you have six months until you are required to begin paying. This loan is offered by the federal government.
Federal Unsubsidized loan
Regardless of your financial need, your school will offer you an unsubsidized loan. The amount they will offer you will depend on the rest of your financial aid package.
With an unsubsidized loan, you are required to begin paying interest as soon as you take out the loan. If you do not want to pay the interest immediately, you may defer your payments (postpone them). Deferring your payments, however, will add the interest due to your capital (the original amount of money you borrowed). Read more on interest and capital below.
Federal vs Private loans
Despite the complexity of federal loans, they are both better options than a private loan from a bank or other financial institution. Federal loans have lower interest rates than banks, meaning that in the long run, you will pay less back. Some of the federal loans perks include:
- Terms and conditions set by law. Conversely, private lenders can change their terms and conditions whenever they want.
- Fixed interest rates. This means you won’t be subjected to a higher interest rate because of the market or your credit score. Private lenders can change their interest rates as they see fit. With lower interest rates, you pay less in the long run!
- Loan forgiveness programs. Your federal debt may be forgiven if you work in certain public service sectors.
CA Dream Loan Program
If you are an undocumented student in California, you are not eligible for federal student loans. However, California has the CA Dream Loan Program available to undergraduate and graduate students attending the CSU and UC.
Your school’s financial aid office will offer you the loan based on your Dream Act application. The maximum loan is $4,000 a year. You are not required to pay interest while you are in school and have six months to start paying your loan off. The terms and agreements are almost identical to the federal subsidized loan.
Read more about the difference between government (state and federal) and private loans here. We at Let’s Go to College CA, highly encourage you to use government loans over private loans; we believe the terms and conditions are better than private loans.
Principal and Interest Rate
What is a principal?
In finance, the principal is the amount of money that you owe. If you take out a $1,000 loan, your principal is simply $1,000.
What is interest?
Interest is the cost of borrowing money. A financial institution will charge you a percentage of the capital, that you have to pay back on their terms. You can pay the interest monthly, yearly, or however often required.
People often think that when you pay interest, you are paying off your loan. This is incorrect. You are simply paying the financial institution for the privilege of having the capital.
Let’s say you take out a $1,000 loan. The interest rate (the percentage of the capital) is 10%. This means that monthly, you are paying the financial institution $100. Even though you are paying $100 every month, your capital, the $1000 you originally borrowed, is still $1000. Again, this is because you have only been paying interest.
The only way to decrease the capital is to pay extra money in addition to the interest. If your capital is $1000 and your interest rate is 10%, then you may want to pay $150. That way, $100 goes towards interest and $50 towards your capital. Then, your capital is $950. This means that your interest payment is now $95. Remember, interest is simply a percentage of the capital you owe.
Please note that with unsubsidized loans, your deferred interest becomes part of your capital. Let’s say you took out a $1000 loan. You differ your 10% interest rates for a whole year (12 months), meaning you did not pay $1200 worth of interest. This amount gets added to your capital, so instead of owing $1000, you now owe $2200. This is how student debt accumulates significantly!
Check out these Youtube videos for more explanation on capital and interest rates.
Check out this US News Report article on college financial literacy. It includes links and brief explanations on budgeting, living on your own, filing taxes, and more.
Vocabulary Summary
Here is a quick rundown of the terms mentioned above!
Federal Subsidized – a loan that does not charge interest until six months after you have graduate college given by the federal government.
Federal Unsubsidized – a loan that charges interest as soon as you take the loan out given by the federal government.
Private loan – a loan that charges interest as soon as you take it out, given by a private lender like a bank, credit union, or other financial institution.
Capital – the amount of money that you owe.
Interest – a percentage of the capital that you are charged for the privilege of the loan
Please know that Let’s Go to College CA is student-led and student-centered. We understand the burden of student debt and will constantly advocate for better affordability.
Basic Needs Support, Paying For College |
Free or reduced-cost services like medical care, food, job training and more can be found around your area! Food or reduced-cost services are services that are free or are at a reduced cost for people with low-income. These services are also available for people with undocumented status.
General:
- Aunt Bertha is one of the largest and most used online social care networks for individuals looking to connect to Community Based Organizations (CBO’s) in the United States. To get started, input your zip code and Aunt Bertha will connect you with CBO’s near you. Financial assistance, food pantries, medical care, and other free or reduced-cost help starts here!
- The Employment Development Department (EDD) of the State of California provides to keep employers, employees, and job seekers competitive. This website provides additional resources that may help you.
- In many parts of California, you can call 2-1-1 to learn about resources in your community or contact these agencies and organizations directly to ask about their programs. Some programs may have eligibility requirements.
Reduced cost or free internet access:
- The Affordable Connectivity Program is administered by USAC with oversight from the Federal Communications Commission. With the FCC’s Affordable Connectivity Program, you can save on your bill and may be able to get high-speed internet for free.
- Spectrum Student Internet Packages offers high-speed internet for students and enough bandwidth to support multiple devices.
Information on low-cost computers:
Northern California: in English and Spanish
Southern California: in English and Spanish
Databases that include services for undocumented communities:
Paying For College, Submitting FAFSA |
The CSS Profile (College Scholarship Service Profile) is an additional financial aid form required by a large number of private colleges and a few public institutions. The CSS Profile utilizes a separate, more comprehensive formula called Institutional Methodology (IM), compared to the one used for the FAFSA. IM aims at providing a more expansive look at the family’s financial situation compared to what the FAFSA offers. Colleges utilize this methodology to determine eligibility for institutional funds only (not federal or state).
The Profile is not free: There is a $9 registration fee and an additional $16 for each school requiring it. There are unlimited fee waivers! But these are not paper fee waivers, nor are they fee waivers in which counselors and advisors have a set amount to distribute. Rather, the student will find out whether or not they are eligible for the fee waivers after they have completed the CSS Profile, based upon income and other factors reported on the form. If students are eligible they are automatically provided the fee waivers at the time of submission.
Similar to the FAFSA, the CSS Profile goes live on October 1 of each year. Deadlines may vary based on the school and by the way you are applying: Regular Decision, Early Action, or Early Decision.
Important links and resources:
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Paying For College, Submitting FAFSA |
The FSA (Federal Student Aid ID) is a self-selected username and password that is an important first step of the federal financial aid process. The FSA ID serves as a legal signature in order to submit the FAFSA. Both the student and one parent (dependent students only) will need to create unique and separate FSA IDs. In a two-parent household, only one parent needs to create an FSA ID. It is recommended that the FSA IDs are created prior to completing the FAFSA.
If a student is not eligible to fill out the FAFSA and will instead be filling out the California Dream Act Application, the student will not be creating an FSA ID. Note that if a parent does not have a social security number they will not be able to create an FSA ID, but can still sign the FAFSA via a printed signature page if the student is eligible to complete the FAFSA.
When registering for the FSA ID there will be a series of questions about the student in terms of basic information like address, etc. Each user will need to select 4 security questions from the drop-down menu and enter answers for them. These security questions will be asked if the user forgets their username or password. In addition, you can use your phone number and/or email for text/email password recovery. A user can retrieve their username or reset their password, either by correctly answering the challenge questions or by having a secure code texted to the cell phone or sent to the email address if they completed the email and/or phone verification steps. If the user uses the challenge question option to reset the password, they will have to wait 30 minutes before they can use their new password.
The FSA ID can be edited and updated as needed and as personal information changes such as an email address. To make changes to the information, the user can go to fsaid.ed.gov and select the “Edit My FSA ID”. Passwords need to be changed every 18 months.
The FSA ID can be a tricky part of the process, especially if there are problems with users forgetting usernames and passwords. If the user gets stuck they can call the FSA ID help center at 1-800-433-3243.
Important links and resources:
- To create an FSA ID click this link: www.studentaid.gov and click on “create account”
- For more information about how to register for an FSA ID, students and families can view this video from Federal Student Aid here.
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Paying For College, Student Loans |
What are the Differences Between Federal & Private Student Loans?
Federal student loans are provided by the government after a student or their family fills out a FAFSA. The conditions are mandated by law and include specific protections (such as fixed interest rates and income-driven repayment plans) not usually associated with private loans. Unlike federal loans, private loans are provided by private companies like banks or credit unions. Private loans have terms and conditions that are set by the lender. Private student loans are generally more expensive and offer fewer benefits and protections than federal student loans.
How Do I Know If I Have a Private or Federal Loan?
Federal student loan information can be found by going to www.StudentAid.gov. If you do not know the name of your lender or servicer, and you cannot find your loan information at StudentAid.gov, you most likely have a private loan. You can find information about your private loan by checking your credit report.
Any student loan information that shows up on your www.StudentAid.gov account are federal loans. It is common that borrowers have both Federal and private loans. If you have a loan that doesn’t show up on your www.StudentAid.gov account, it is important to check your credit report to find out who your private loan company is.
Are There Different Interest Rates With Federal and Private Loans?
Federal loans have fixed interest rates that are usually lower than private loans. Private student loans can have variable or fixed interest rates. The interest rate on private student loans can be higher or lower than the interest rate on federal loans.
Do Private Student Loans Have Repayment Plans?
Only federal student loans have mandated repayment plans by the government. If you have a private student loan, and are struggling to make your monthly payment, you should contact your loan servicer to inquire about any repayment plans they offer.
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