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.

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A grace period is the time during which a loan recipient who has graduated, withdrawn from school, or dropped below half time status does not have to begin loan repayment.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 Promissory Note (MPN). Students can access the MPN online and can sign electronically if they have a FSA ID. If a student prefers paper MPN, a request can be made through the Center for Student Financial Aid.

Multiple Disbursements

All full year loans that span two terms or more must be disbursed in multiple disbursements which can cover an academic year ranging from one to two semesters.

Variable Interest Rate

Interest is paid to a lender as a cost of borrowing money. Federal student loans have a fixed interest rate set by federal law. The interest rate changes every July and will vary each academic year. 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, with their loan servicer as it accumulates in order to prevent an increase to the principal loan amount.