Get a Student Loan

More on Private Loans

Private student loans typically let you borrow more money than federal loans, and offer a variety of interest rates, fees and other borrower terms. Some are variable-rate loans linked to market conditions, while other are fixed-rate. Some lenders require students to make payments while they are enrolled, while many others allow students to pay later, or offer a grace period where payment is not required, until after graduation. Often students are the primary borrower of these loans and generally will need a credit-worthy co-signer, such as a relative or friend, to ensure they are approved for the loan.

Often private loans require you to have an established and decent credit score to be eligible. Most students straight out of high school have yet to establish credit and therefore will require a co-signer. A co-signer is someone with good credit standing who agrees to be your guarantor or be financially liable for you during the life of your loan. Generally speaking, the better your – or your co-signer’s – credit, the better your private student loan terms. Private loans may have higher loan limits and more generous loan cap amounts than federal loans for these borrowers. Private lenders may require a certification from the school in order to determine the maximum amount of money, or cap, they will offer to lend you. This is based on the cost of attendance minus any other aid you may already be receiving. Each private lender will set the terms, conditions, and eligibility requirements for the loans they offer.

The application process may also differ from lender to lender. Many have the option to fill them out electronically on their individual website. You will generally need your name, date of birth, school information, Social Security number, and income or tax information to apply. Most private lenders will perform a credit check to determine your eligibility. Private lenders do not publish the rate you will receive before the application is complete, so you should apply for more than one in order to determine which one offers the most favorable terms.

Once you have been approved, the lender will send you a letter detailing the terms and conditions of your loan. The money is not disbursed until you accept these terms and sign a promissory note that details your rights and responsibilities as a borrower. This note is a legally binding contract between you and the lender in which you agree to repay your loan and all interest accrued. Be sure to keep a copy of your promissory note for your records.

Generally speaking, loans are disbursed directly to the school and used to pay education-related expenses. This means that the loan will cover your tuition and fees and then, if there is any money left over, it will be disbursed to you to cover any other outstanding educational expenses. Depending on the type of loan offered by your lender, after tuition and school fees are covered, you can use a private student loan to pay for:

Loans are generally based on the total cost of attendance at a school, which is not limited to just the cost of enrollment. When applying for a private student loan, you should only borrow however much you actually need which may be less than the amount offered to you. It can be very easy to get into debt quickly and difficult to dig yourself out.