Status of Student Loan Options on the Central Coast

SAN LUIS OBISPO, Calif. - Local university students with student loans will have to deal with a different federal agency as president Trump's administration moves to dissolve the Department of Education.

The Trump administration has specified that certain essential functions of the Department will be preserved, such as the funding for low income schools afforded under Title I, Pell Grants, and assistance to children with disabilities.

But those taking out student loans are in for big changes.

“High school seniors currently are getting their award letters from the colleges and universities. Those award letters are very, very important to figure out how much each family is going to owe the place where their kid is going to spend the next four years,” says Jack Wallace, director of Yrefy.

Some students say they're already feeling a pinch as they begin to read their financial aid award letters for the fall semester.

“The expected cost is higher for a lot of people and then the financial aid is lower. So definitely there's a lot more like disparity between how much they're going to pay this year versus next year,” says Cal Poly freshman Benjamin Oetman.

The $1.6 trillion federal student loan portfolio will be directed to the Small Business Administration.

Simultaneously, DOGE is pushing the SBA to cut 43% of its workforce, raising questions about staff being able to handle loan processes and questions. 

“You've got almost 4 million people in California with student loan debt, and it's almost 150 billion,” says Wallace. 

Despite all the changes, students should be aware they remain on the hook to pay these loans back.

“They need to repay their loans if they want to maintain or enhance their credit scores,” says Wallace.

As seniors are graduating from high school soon, Wallace says to choose an affordable college at first.

He also says to take a close look at loan rates.

According to educationdata.org, federal interest rates have risen to more than 6 percent for most undergraduates.

Private loan rates range from 3 and a half percent to more than 16 percent, but you have to qualify for a loan with lower rates.