Student loans: Friend or foe?

The economy hurts all people, including those who want to earn a degree.

It is common to find an increasing rate of college students who borrow money to realize their dream and students at California Baptist University also follow the trend.

Special projects coordinator in CBU’s Financial Aid office, Amy Gwilt, said that students need to be careful when borrowing money for school.

“We caution our students when getting into debt,” Gwilt said. “There has to be a balance. You are investing in your education but the key is to be realistic.”

New changes made to the loan program this academic year were due to the passage of President Obama’s health care reform bill. This required all students to fill out a new master promissory note and complete new entrance counseling sessions is using loans.

All universities are now under the Direct Loans program, under the Department of Education’s federal program. Before, CBU participated in the Federal Family Education Loan Program.

Gwilt said the master promissory note is student’s signed “promise to pay back loans.”

The entrance counseling session and quiz designed “to educate students on borrowing,” Gwilt said.

“It’s a mandatory part of borrowing,” Gwilt said of the two items needed for loans. “Both have to be completed.”

The financial aid office contacted students through email and paper letters if they still have missing documents. Now, the office will place spring registration holds on students’ accounts if the note and counseling session are not complete.

In order to apply for federal loans, students must fill out the Free Application for Federal Student Aid every year. There are two federal loans that students might be eligible for: subsidized and unsubsidized.

The main difference between the loans deals with the interest rate. For subsidized loans, the government pays for the interest while the student is in school. For the unsubsidized loan, the student has the option of paying the interest. If no payment is made during the school years, then the interest will be capitalized, added to the principal balance.

“Without loans it will be harder to pay for school,” freshman Maribel Ramirez said. “But imagine I don’t get a job and then I’ll be in debt, with no money to pay my loans back.”

Ramirez said that she started “looking toward the future” and wants to know that she “can repay her loans.” She does not want to borrow more than necessary; especially since interest accrues while she’s in school for some of her loans.

Apart from the federal student loans, parents of dependent students can apply for a parent plus loan. This loan is based on credit and is used to help supplement the student’s aid. Parents borrow the loan, it is taken out in their name and repayment can be deferred.

The other loan option includes an alternative loan. This is a private loan that can be borrowed by a student or parent. More information can be found on InsideCBU, under the Financial Aid tab.

Because CBU switched their lending program, students are faced with multiple lenders. One of those lenders is Direct Loans. Because loans are typically bought or sold, lenders can change several times during the life of the loans.

Gwilt recommends students consolidate their loans. This is the process were all loans borrowed are refinanced with one company and made into a single loan, “so you would have one payment and one lender.” More information about consolidation can be found at

Gwilt strongly encourages students to use nslds.ed.giv, the national loan database system website. This website lets students access information on the loans they have borrowed.

The website details the type of loan, amount borrowed and school the student attended. Students can also get the most up-to-date information on the lender currently owning the loan.