Depending on your lender, the process can take 3 to 6 weeks from the time you apply until receipt of funds. Most lenders send loan proceeds to the University electronically.
Private loans, also known as alternative loans, can help cover your educational costs after all other federal, state, and institutional options have been exhausted. Unlike Federal Direct Loans, private loans are offered by private lenders and eligibility depends on your credit score. Private loans may also be available to students enrolled less than half-time, or in non-degree programs.
To help students and their families evaluate their lender options, the Office of Student Financial Aid (OSFA) utilizes ELM Select, a website that provides comparative information on lenders and their loan products.
The Private Loan Application Process
- Research – You may research private loans with any lender. Before you apply for a private loan, first exhaust your eligibility for Federal loans. You may review a list of frequently used private loan lenders here.
- Disclosure Forms – Lenders must provide required disclosures to the student and co-signer, if applicable, at three different times during the private loan origination process:
- Application and Solicitation Disclosure – Provided during the online loan application process or via mail included with the Promissory note.
- Approval Disclosure – Provided after the loan is approved and the lender has received the promissory note, the Application and Solicitation Disclosure and the Borrower Self Certification Form and the school certification. The applicant and any co-signer have 30 days to return the approval disclosure.
- Final Disclosure – Provided after the lender receives the Approval Disclosure from the borrower and any co-signer, indicating that the loan has been accepted by the student and the co-signer, if applicable. The loan will not disburse until at least 3 business days after this disclosure is received by the borrower and any co-signer.
- Borrower Self-Certification Form – A credit-approved student borrower must submit a completed borrower self-certification form to the lender before school certification will be requested.
- School Certification - Your lender will send the OSFA an electronic certification. The maximum amount you may borrow in private loan funds each academic year is the student’s cost of attendance minus other financial aid received.
- Timing Requirements – Depending on your lender, the process can take 3 to 6 weeks from the time you apply until receipt of funds. Most lenders send loan proceeds to the University electronically.
Items to Consider When Comparing Lenders
- Check how frequently the lender compounds interest on private loans. A low interest rate that is compounded daily can be a more expensive loan.
- Interest on a private loan begins to accrue upon disbursement, unlike Subsidized Federal Direct loans.
- Fees charged by lenders can increase the cost of the loan. A loan with a relatively low interest rate but high fees can cost more than a loan with a higher interest rate and no fees.
- Federal Direct loans may offer better repayment and forgiveness options than private loans.
- Private loans may require that you have a credit history and verifiable income; if you do not meet the qualifying requirements, a co-signer may be required. It is better to apply for a private student loan with a co-signer, even if you could qualify for the loan on your own. Applying with a co-signer usually results in a lower interest rate because the loans are not as risky for the lender.
- Keep in mind that private student loans are only available to students whose cost of attendance has not already been met with other financial aid.
- Private student loans typically have variable interest rates tied to an index, such as LIBOR or PRIME, plus a margin.