Apply
To apply for a private student loan, please click here.
About Private Loans
Private loans, also known as alternative loans, can be taken out as a supplement
to federal financial aid. Students who have used up their Pell grant money and taken
out the maximum allotted amount in federal loans may borrow additional funds from
a private lender. Private loans may also be taken out by students who were not awarded
federal aid.
Interest Rates
Private Loan rates rise and fall with the economy and vary from lender to lender.
Each student lender sets their own interest rate and chooses what kind of borrower
benefits their customers will receive. In contrast, federal loans taken out after
July 1, 2006 are fixed at rates determined by the government (currently 7.90%- 8.50%
for PLUS and 6.8% for Stafford Loans). The interest rates on private loans are typically
higher than those on federal loans, but lenders may choose to lower their rates
or increase borrower benefits if they choose to do so.
Borrowing Limits
The amount of money a student may borrow in private loans is usually greater than
the amount that may be borrowed in federal loans. The chosen lender will be able
to tell the student how much money they can borrow. Student federal loan limits
are outlined in the award letter a student receives after submitting a FAFSA. For
the 2007-2008 year, the maximum Stafford Loan money a full-time dependent undergraduate
student may borrow varies between $3,500 and $5,500 annually depending on year in
school. If a student’s parent is eligible to receive a federal PLUS Loan, they may
be able to borrow more.
Choosing a Student Lender
Students who attend schools participating in the Direct Loan Program borrow directly
from the government and will not need to select a student lender. Those who borrow
from schools participating in the federally subsidized FFEL Program and those who
take out private loans (or a combination of the aforementioned) will have to choose
a lender. Schools typically offer preferred lender lists that recommend lenders
to students, but it is best to supplement school advice with personal research.
Many student lenders are available, and they offer varying interest rates, borrower
benefits and repayment guidelines. Schools are required to process loans from the
student’s lender of choice without unreasonable delay, regardless of whether the
lender appears on the school preferred lender list.
Private vs. Federal Loan Repayment
- Private lenders usually require that students begin making payments once the initial
disbursement has been issued. In cases where in-school forbearance is granted, interest
will generally accrue.
- Federal Stafford payments may be deferred until 6 months after graduation. Interest
does not accrue during this time.
- Parents who take out federal PLUS loans must make the first payment within 60 days
after the loan is fully disbursed. Graduate students who take out federal PLUS loans
may defer their loans until graduation, but interest will accrue during this period.
- Private loans usually have to be repaid regardless of situation, including bankruptcy.
- After a certain number of years, some students may be eligible for federal loan
forgiveness.
Apply
To apply for a private student loan, please click here.