How to Refinance or Get California Student Loans

California student loans

Residents of the Golden State have a lot to brag about: beautiful beaches, epic mountains, a booming television and film industry, and the epicenter of technology.

However, there’s one thing California dwellers might not be so thrilled about: student loan debt. And as if student loans weren’t bad enough, the high cost of living in much of California makes achieving financial success even more of a challenge.

But here’s the good news: There are programs to help with California student loans. Read on to find some programs that might help you.

The state of California student loans

If you’re curious about where you stand compared to the average amount of California student loan debt, here are some numbers to get you oriented.

Student Loan Report recently aggregated the amount of student loan debt per state, and 24/7 Wall St. reported on it. Here are some of the findings:

  • The average amount of California student loan debt per graduate is more than $12,000.
  • More than 32 percent of adults in California have at least a bachelor’s degree.
  • The median household income for ages 25 to 44 in California ranks 15th highest in the U.S.

It’s also interesting to note that California boasts more than 1.7 million graduates from its University of California schools. And the majority of those schools’ students receive financial aid to attend.

So, where does this degree get you?

According to Census Bureau data, it can make a large difference in your income — despite the costs you might incur to graduate. In fact, California residents with at least a bachelor’s degree have, on average, more than double the income of those who did not attend college.

Federal student loans for California schools

If you hope to attend school in California, you can get federal student loans to help you pay for college. Start by filling out the Free Application for Federal Student Aid (FAFSA). Have a copy of the information sent to each of the schools you are interested in attending.

Each college will present a student aid package based on your FAFSA, including how much you can borrow in federal student loans. You don’t need to worry about a credit check or income to get these types of loans. Plus, if you qualify based on need, you might be able to get subsidized loans — and have the government pay your interest while you’re in school.

You can get federal loans each year you attend school. However, you need to complete a FAFSA each year.

Private student loans for attending college in California

In some cases, you might not be able to pay for college in California using just federal loans. After receiving your financial aid package, calculate the difference between what it will cost to attend college (including tuition, fees, room, and books) and what you have. You might need to apply for private student loans in order to make up the difference.

Depending on the lender, you might need to prove your credit history or show your income. If you can’t qualify for a private student loan on your own, consider getting a cosigner to help you.

Private student loans can be a way to bridge the funding gap if federal loans just aren’t enough.

Resources to help if you have student loans in California

But what if you’re already done with school? If you have California student loans and work in California, there are a few student loan repayment assistance programs that can help, depending on your needs and qualifications.

1. Free Tuition

This first option doesn’t pertain to graduates. Instead, it’s for people who are attending college in California or preparing to enroll. If that’s you, you might qualify for free tuition through one of two programs: Free City or Cal Grant.

Free City is for San Francisco residents attending City College, a two-year community college. The program is available regardless of need. Anyone can apply through the City College of San Francisco website.

Free City is just for San Franciscans, but Cal Grant is much broader. According to the California Student Aid Commission (CSAC), Cal Grants can be used at the following schools:

  • University of California
  • California State University
  • California Community College
  • Certain independent, career, or technical colleges in the state

Cal Grants come in three types: A, B, and C. The eligibility requirements and award amounts vary based on your FAFSA, your school, your GPA, and the year you graduated from high school. You can find details on the CSAC website.

There are more specialized grant programs too, including:

You also can find more programs on the CSAC website.

2. CDA Foundation Student Loan Repayment Grant

The California Dental Association (CDA) Foundation offers a student loan repayment grant for new dentists working in underserved communities. You can receive up to $105,000, paid out over three years, for repayment of your California student loans.

If you don’t receive that grant, you still could earn an award of up to $5,000 toward education expenses as a runner-up. You can apply on the CDA website.

3. California Bachelor of Science Nursing Loan Repayment Program

You might qualify for this program if you’re a California nurse with California student loans. Here are the details, according to the Office of Statewide Health Planning and Development (OSHPD):

  • You must have a Bachelor of Science nursing degree.
  • You must be a California-licensed registered nurse (RN).
  • You must be giving direct patient care as an RN in an underserved or shortage area or in a county, state, prison, or veterans facility.

Nurses who receive the award must agree to work in one of the above areas for two years.

If you’re selected for the award, you can receive up to $8,000 for student loan repayment. You also can try for a second-time award of $11,000, but you’ll have to agree to another two years.

4. California Mental Health Loan Assumption Program

This award is for professionals working in the Public Mental Health System. According to OSHPD, some of the eligible positions include the following, based on need in the county you work in:

  • Psychologists
  • Psychiatrists
  • Postdoctoral psychological assistants or trainees
  • Marriage therapists
  • Family therapists
  • Social workers
  • Clinical counselors or clinical counselor interns
  • Psychiatric mental health nurse practitioners
  • Other staff within such facilities

You can find more information about whether your work qualifies you for this award by going to the OSHPD website.

If you’re selected for an award, you can receive up to $10,000 for your California student loan repayment. In return, you must agree to continue the work for one year.

5. California State Loan Repayment Program

The California State Loan Repayment Program helps you pay your student loans in California if you work in one of the following fields, according to OSHPD:

  • Primary care physicians
  • Dentists
  • Dental hygienists
  • Physician assistants
  • Nurse practitioners
  • Certified nurse midwives
  • Pharmacists
  • Mental or behavioral health providers

That said, you must work in a shortage area, which you can learn more about on the OSHPD website. The award amount varies.

The California State Loan Repayment Program enables you to receive up to $110,000 if you’re a full-time student or half that if you’re a part-time student. You must commit to full-time status for at least two years or part-time status for at least four.

If you think you qualify, you can apply for the award on the OSHPD website.

6. Steven M. Thompson Physician Corps Loan Repayment Program

You might qualify for this program if you’re a California allopathic or osteopathic physician or surgeon with California student loans. Here are a few of the qualifications, according to OSHPD:

  • You can’t be obligated to serve for any other programs.
  • You have to be licensed to practice in California.
  • You must work in a shortage area.

With this award, you can receive up to $105,000 for your California student loan repayment. But you must work full time in the designated shortage area for at least three years.

7. California Loan Repayment Assistance Programs (LRAPs) offered by your alma mater

If you don’t qualify for any of the aforementioned awards, there are other ways you can receive help. One way is through a student loan repayment assistance program (LRAP) offered by your alma mater.

You can find out if your alma mater offers an LRAP by browsing its website or contacting its financial aid office. For all you know, there could be a plan in place to help.

Statute of limitations on student loans in California

If you’re facing student loan default, look into the statute of limitations on debt as it pertains to your student loans. Keep in mind that it applies only to private student loans.

Basically, after a designated number of years, your debt becomes “time-barred.” When that happens, debt collectors can no longer successfully sue you to collect on that debt.

When the statute of limitations expires depends on the type of debt you have. Student loans fall under “written contracts,” which expire at four years in California.

In other words, if your private student loan debt is more than four years old and a debt collector tries to sue you to collect, there’s only one way the debt collector can win, and that’s if you don’t show up to court to use the statute of limitations to prove you no longer owe.

There’s one more important detail you should be aware of: If your private student loans are in default and you make a payment on them, you’ll restart the clock on the statute of limitations.

Federal income-driven repayment programs

If you have federal student loans and are having trouble making payments, you can take advantage of income-driven repayment (IDR) programs that cap your monthly obligation to 10 percent of your income.

These IDR programs allow you to stay current on your loans without going into deferment or forbearance. It’s important to realize, though, that you could end up paying much more in interest over time. Your loans might be forgiven after 20 or 25 years (depending on the program), but by that time you might have paid even more than you originally owed — and you might be taxed on the amount forgiven.

Once you start earning more money, you can put some of it toward paying off your loans faster.

Student loan refinancing

Another way to get your payments under control is by refinancing your student debt to a lower rate. This works especially well with private student loans. You can refinance to a lower rate or shorter term to get out of debt faster as well.

You can also refinance federal loans. If you don’t qualify for IDR, and you have good credit, refinancing your federal loans can save you money. However, you will also lose the potential to go on IDR later, if your financial situation changes.

Carefully weigh your options to determine if refinancing is the right move for you. It’s also possible to refinance your private student loans, and separately consolidate your federal loans if you want to maintain some of your protections.

Federal Public Service Loan Forgiveness

Borrowers that work for a government or nonprofit entity can potentially have their loans wiped out with Public Service Loan Forgiveness (PSLF). In order to qualify, you need to work in a qualifying job and make 120 consecutive payments on your eligible loans.

Before you begin a job on the basis of receiving PSLF, make sure your federal loans qualify, and double-check to see if your employer qualifies. In order to be most effective, you need to be on IDR, since standard repayment is designed to have your loans paid off in 10 years.

How to live your dream even with California student loans

Repaying student loan debt can be a lonely endeavor, especially if you feel like your number isn’t getting smaller as the years go by.

You can expedite your repayment by refinancing your student loans to a lower interest rate or paying extra whenever you can. But that’s not all you can do.

If you’d like to see the laws regarding California student loans change, take your ideas straight to the powers that be: your local representatives.

On GovTrack, you can find a list of your current California senators and California representatives. Reach out to them, and let your voice be heard. It’s more powerful than you might think.

And finally, stay on top of your loans by doing the following:

  • Utilizing the above programs if you qualify
  • Understanding your rights, including those dictated by the statute of limitations on debt
  • Remembering that you’re not alone in your debt payoff journey

Student loan debt is a challenge; there’s no question about that. But if you follow the steps above and remember to tap into the programs available to you in California, you can create a winning strategy.

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