What are Private Loans?
Alternative educational loans are available from private lenders and offer additional financial assistance to you if you’ve exhausted all other sources of funding for your education or decide not to pursue federal funding. These programs are meant to supplement federal and state aid when the Cost of Attendance isn’t fully covered.
Things to Consider When Exploring Private Loan Options
- Private loans are credit based so approval may depend on credit history. Students who do not have established credit or have adverse credit history may require a cosigner or endorser for the loan.
- Interest rates may be fixed or variable. Fixed interest rates will stay the same throughout the life of the loan whereas variable interest rates can fluctuate over time.
- Repayment options will vary from lender to lender. Some lenders will require repayment while students are enrolled whereas others will allow repayment to be deferred until after graduation.
- Similar to the federal loans, private loans may have origination fees, which are typically percentage fees taken at the time of disbursement.
- For example, if a private lender has a 5% origination fee and you request a $5,000 loan, the origination fee would be; $5,000 x .05 = $250, meaning the amount of funds you would receive would be $4,750. You would be responsible for repayment of the full $5,000 + any interest accrued at the time of repayment.
How to Apply for a Private Loan
- Students can choose whatever lender best meets their educational and financial needs, but we know the process can be overwhelming.
- Once you have found a lender that fits your financial and educational needs and have meet all requirements for approval, the lender will send a request to our office to certify the loan. The certification process takes our office a minimum of 2-3 weeks to complete and requests to certify are processed in the order that they are received. Our office will not certify private loan requests for an amount that exceeds the cost of attendance, minus other financial aid or that requires funding or financial guarantees by the university.
- Any refund generated by an alternative loan can only be refunded to the student’s account, including an alternative loan where the borrower is someone other than the student (i.e. parent, relative, etc.).
- Once our office has certified the loan, lenders will provide an estimated date of disbursement for the funds. Truth In Lending Act regulations include additional processing steps and require a 3-day waiting period after the disclosures have been completed before the loan can be disbursed. Depending on the lender, this can add an additional 3 to 7 days from the time of application to disbursement.
- Any refund generated by an alternative loan can only be refunded to the student’s account, including an alternative loan where the borrower is someone other than the student (i.e. parent, relative, etc.).