Loan Terminology

Direct Loan Servicing Center

The Servicing Center answers questions, manages and collects loan payments, and works with the borrower if problems arise during repayment. The U.S. Department of Education's Direct Loan Servicing Center's toll-free telephone number is 1-800-848-0979.

Enrollment Requirements

To maintain eligibility for the duration of the loan period, the borrower must enroll in and complete the equivalent of half-time status (6 units undergraduate, teaching credential, second baccalaureate, and graduate students). For graduate students, 500 series courses are weighted at 1.5 units (i.e. 4 units x 1.5 = 6 units). For graduate students, additional information on weight factors is available within the Schedule of Classes – General Information section – under Study Load. The Schedule of Classes is updated and published for each term/quarter.

Grace Period

A grace period is the time during which a loan recipient who has graduated, withdrawn from school, or dropped below half time status does not have to begin loan repayment. Most grace periods are six months in length.

Loan Fee

This is a nominal charge that is deducted from the loan prior to disbursement of the funds. This fee may vary for each new academic year.

Master Promissory Note

Once the loan is processed, new Cal State L.A. borrowers must sign a Master Promissor Note (MPN). Students can access the MPN online at and can sign electronically if they have a federal PIN number. If they do not have this number, they can apply for one at: . If a student prefers paper MPN, a request can be made through the Center for Student Financial Aid.

Multiple Disbursements

All loans must be disbursed in multiple disbursements which can cover an academic year ranging from one to four quarters. A one quarter loan requires at least two disbursements. Loans extending two quarters or more will be disbursed quarterly.

Variable Interest Rate

This refers to the interest rate, which changes every July. The rate may be fixed or may vary between 3-8.25%. The interest can be capitalized on any unsubsidized loan, which postpones the interest payment but adds it to the principal. The borrower may choose to pay the on-going interest, which starts accruing the day the loan money is disbursed. It is recommended that borrowers pay the interest either quarterly or yearly, in order to prevent an increase to the principal loan amount.