California Student Loans

Navigating financial aid is a rite of passage for incoming college students. The process gets easier each year, but it still requires careful planning. Part of that planning involves evaluating student loan lenders when scholarships and grants aren’t sufficient.

Luckily, we’ve researched to take the guesswork out of finding student loans. Keep reading for the best loans available to students in California.

How to get student loans in California

First, all students should apply for federal student aid by filling out the Free Application for Federal Student Aid (FAFSA). You can access various financial aid options through one simple online application. The application is also required for state-based student aid.

During the application, be ready to provide information about yourself, your school, and your financial need. You’ll supply personal information, like your name, address, and citizenship. You must also indicate which school you plan to attend and the expected tuition costs.

After completing the FAFSA, your school will use your Student Aid Index (SAI) to generate your financial aid award letter. This letter details your eligibility for scholarships, grants, and federal loans. You’ll also know the gap, if any, you might need to fill with other resources, such as private student loans.

Company	Best for
U.S. Department of Education	Federal student loans
College Ave	Private student loans
Sallie Mae	Cosigners
Earnest	No fees
Ascent	Deferred payments

Federal student loans in California

We recommend starting with federal loans if you are considering borrowing money for school. Federal loans offer benefits not available through private lenders, such as:

• Low, fixed rates: The federal government determines rates ahead of each academic year, and every student who borrows during that school year will have the same stable rate throughout repayment.
• Repayment options: If you encounter financial hardship, you can take advantage of deferment or forbearance options. You can also apply for one of four income-driven repayment plans designed to help make repayment easier.
• Loan forgiveness: Eligible borrowers can take advantage of student loan forgiveness programs. If you qualify, you won’t have to repay your forgiven balance.

Types of federal loans

There are several types of federal student loans available to borrowers throughout the U.S., including those studying in California:

• Direct Subsidized Loans: These loans are available to undergraduates with financial need. The Department of Education pays interest on these loans while you’re in school, for six months after you leave school, and during deferment.
• Direct Unsubsidized Loans: These loans are available to undergraduate and graduate students regardless of financial need. You’re responsible for paying the interest on this loan during all periods.
• PLUS Loans: There are two types of PLUS Loans, the Parent PLUS Loan and the Grad PLUS Loan. The Parent PLUS Loan is for parents of dependent undergraduate students, while the Grad PLUS Loan is reserved for graduate and professional students.

Your cost of attendance largely determines how much you can borrow in federal loans. Your credit score doesn’t play a factor with Direct Subsidized and Unsubsidized Loans, but Direct PLUS Loans require a credit check for approval.

Private student loans in California

Due to borrowing limits set on federal student loans, many borrowers need private loans to augment their financial aid. To help you find funding faster, we’ve analyzed several lenders to bring you these top choices for student loans in California.

College Ave

Sallie Mae 

Earnest 

Ascent 

To compare other options, check out our guide to the best private student loans or learn more about state student loans.

What to know about student loans in California

Student loan borrowers in California are protected by the state’s Student Borrower Bill of Rights. Introduced under Assembly Bill 376, the Student Borrower Bill of Rights affords you the following protections:

• Late fees are capped at 6% of your unpaid balance.
• Lenders can’t impose minimum flat-dollar-amount late fees.
• Payments made by 11:59 p.m. on the due date must be considered on-time payments.
• Overpayments must be applied in a way that benefits you financially.

Many lenders don’t just set payment due dates, they set cutoff times as well. If your payment isn’t made by, say, 8:00 p.m. the day it’s due, it’s considered late. You could be charged your lender’s full late payment penalty just for being a few minutes behind.

To better illustrate how this could impact you, imagine that you pay $100 toward your student loans. If your lender has a mandatory minimum $15 late fee, that means you’ll pay a 15% penalty for submitting your payment on or after 8:01 p.m.

That’s no longer permissible in California, at least not for student loans. Instead, you’ll have until just before midnight to make your payment. If you submit after 11:59 p.m. on your due date, you won’t pay more than 6% in late fees—which, in this hypothetical case, would save you $7.

Perhaps most importantly, California’s Student Borrower Bill of Rights requires lenders to ask borrowers how they want overpayments applied. Absent your input, your lender has to act in your best interest.

In many states and with many lenders, overpayments are applied first to any fees, then to accrued interest, and finally to your principal balance. In California, however, student loan lenders are legally obligated to use your overpayment to reduce the total cost of your loan.

As you’re able, take advantage of these protections to make extra payments toward your principal. Not only will shrinking your principal balance help you pay off your student debt more quickly, but it’ll save you hundreds—maybe thousands—in interest over the life of your loan.

FAQ 

Can I switch my rate from variable to fixed (or vice versa) during my loan term?

Most lenders offer a choice between a fixed or variable rate when you first borrow. However, changing your rate after this point isn’t typically an option. Refinancing your student loan is likely the only possible solution if you want to change from a variable to a fixed rate or vice versa.

How do I qualify for a student loan?

Qualifying for a student loan usually involves basic eligibility criteria. You must be a U.S. citizen or a permanent resident. Some lenders may allow international students with a U.S. citizen cosigner. 

In many cases, you must be enrolled at least half-time in an eligible degree-granting program. Approval also often requires a good or excellent credit score or a creditworthy cosigner.

Do any student loan lenders not offer fixed rates?

While most student loan lenders offer a choice of fixed or variable rates, this isn’t a universal practice. A few lenders only provide one or the other. We recommend paying close attention to the types of interest rates a lender offers when considering it.

How we picked the best private student loans in California

LendEDU evaluates student loan lenders to help readers find the best student loans. Accessibility is important to this evaluation, so our editorial ratings system primarily focuses on companies available in most U.S. states. That’s why the lenders we selected in the online section have editorial ratings. They’ve gone through an extensive review process and were determined to offer superior products compared to other lenders. We’ve also independently verified that these companies are available in California.

Since most local lenders aren’t available outside state lines, they haven’t gone through the same review process as the online lenders. Instead, we found them through separate research and determined that each offered solutions worthy of consideration by readers.

Ask the expert

Erin Kinkade

CFP®

I would not recommend that these protections dictate where a student attends school unless there is a strong conviction that their financial condition or personal/family preference warrants repayment plans/benefits to guide their decision for their education. If this is important to you, I suggest narrowing down options to schools and lenders in the state of California and, of course, preparing a pros and cons list.

Recap of best private California student loans

Company	Best for
U.S. Department of Education	Federal student loans
College Ave	Private student loans
Sallie Mae	Cosigners
Earnest	No fees
Ascent	Deferred payments