What are Private Student Loans?

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Private student loans are issued by financial services companies as an additional source of funds for higher education. They are not guaranteed or issued by the federal government. Private student loans offer a good option when all other sources of aid have been explored.

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Do I need to complete a FASFA (Free Application for Federal Student Aid) to be eligible to apply for a private student loan?

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A FASFA is not required to apply for a Private student loan. However, the FAFSA is required for all Federal Student Aid and should be completed as part of the financial aid process.

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How do I qualify for a private student loan?

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Having a good credit history is the primary factor for approval. Since most students do not have an established credit history you may need to apply with a parent or other creditworthy cosigner.

Lenders have other requirements, including:

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• The lender must have approved your school for its loans.

• The student must be enrolled. 

• The student and co-signer must be at least 18 years old (most lenders).

• The student must complete the lender’s self certification form.

• The lender may require additional documentation from the student and/or cosigner.

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What’s the difference between a PLUS loan and a private student loan cosigned by a parent?

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With the PLUS loan, the parent is the borrower and is solely responsible for repayment. When a parent cosigns a private student loan the student is the borrower and is responsible for payments. The parent becomes responsible only when the student fails to make payments. Upon request, many providers will release a co‐signer from this responsibility once the borrower is creditworthy and demonstrates an on time payment history.

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Why would a parent elect to cosign a private loan?

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Co‐signing a private student loan for your student greatly improves its chance of approval. Often, with a cosigner, the student will qualify for a lower rate. In addition, when the student begins repayment, he/she will be establishing valuable credit history.

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Can I use a private student loan for things other than tuition?

 

A private student loan can be used to pay any unmet need based on the school’s Cost of Attendance. This normally includes tuition, fees, living expenses, books and supplies, and other approved education related expenses.

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How much can I borrow?

 

You may borrow up to a maximum of the school’s Cost of Attendance minus your other aid. The school’s Cost of Attendance is the sum of your tuition and fees, room and board, books and supplies, and other approved education related expenses.

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Will my college Financial Aid Office need to certify my private student loan?

 

Yes, schools will certify a private student loan up to the amount appropriate for your unmet need. Lenders normally approve loans only up to the amount certified by the school.

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