Private Loan Programs
Many lenders have private alternative loan programs for students who have borrowed their annual maximum Federal Title IV Subsidized and/or Unsubsidized annual or aggregate loan limit and still have unmet need for the academic year.
A private loan is provided by a private educational lender that is not a title IV loan and that is issued expressly for postsecondary education expenses to a borrower, regardless of whether the loan is provided through the educational institution that the student attends or directly to the borrower from the private educational lender. A private education loan does not include—
- An extension of credit under an open end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling; or
- An extension of credit in which the educational institution is the lender if—
(i) The term of the extension of credit is 90 days or less; or
(ii) An interest rate will not be applied to the credit balance and the term of the extension of credit is one year or less, even if the credit is payable in more than four installments.
Federal law requires that before a lender may disburse a private student loan to a borrower attending an institution of higher education, the lender must obtain a completed and signed self-certification form from the borrower. The Financial Aid Office can assist with providing the Cost of Attendance, Estimated Financial Assistance, and remaining need which is data required for the Self-Certification form. The lender must provide an Application Disclosure, an Approval Disclosure, and a Final Disclosure to the student.
You can go to http://www.aie.org/Calculators/Loan/index.cfm for a Loan Calculator. The Loan Calculator will give you an example of how much you will have to pay using a standard repayment method.
Private Loan Comparison Questions to Consider:
1. What is the current interest rate?
2. Is this a variable or fixed interest rate loan?
3. What is the maximum loan amount?
4. What are the enrollment requirements to recieve a loan?
5. If any, what fees are attached to the loan?
6. Is this a credit-based loan?
7. Is a cosigner optional or required?
8. When does the loan enter repayment?
9. Are deferment options available?
10. Are forbearance options available?
What Students Should Know:
1. The difference betwen federal and private student loans
2. All the terms and conditions of their loans
3. How to find the entity that holds and services their loans
4. Who to contact with questions or issues
5. Repayment options
6. What to do if they can't make payments
7. The consequences of missing payments
8. The Consequences of default
9. How to get a loan out of default
10. How bankruptcy impacts a loan