Private Student Loans
When considering private student loans, it is extremely important from a personal finance standpoint that you have first exhausted ALL other financing options such as grants, scholarships, and considered all types of federal student loan options. Without excellent credit histories, students will likely need to find willing, creditworthy individuals to co-sign their Private Loan applications in hopes of being approved.
Regulation Z Requirements – Private Loan Regulations (Title X of the Higher Education Opportunity Act) : As of February 14, 2010, both private lenders and institutions offering private loans to students must comply with a new set of regulations per the Federal Reserve Board. Under the new laws, a lender offering private loans for post secondary educational expenses must first provide a disclosure about loan terms and features at the time of application and must disclose information about federal student loan programs that may offer less costly alternatives. If the initial application reaches an approval status, a second loan disclosure statement must be provided to the student at that time. If a student accepts the loan terms provided in the second disclosure statement, a third final disclosure must be provided when the loan is consummated. An additional piece of the new private loan regulations requires an applicant to complete a “self-certification form” and return it to the lender before they may disburse the loan to the school. The “self-certification form” may be found on the lender’s website. If you need assistance completing the form, please visit Student Financial Services. Each private lender may have a slightly different application process, so it is best to contact your private loan lender directly if you have any questions. Last, a lender must provide the student with a 3 day rescission or “right-to-cancel” period after the final loan disclosure form is sent to the student. The 3 day rescission period means that once the school has certified your loan and it is ready to be disbursed, there is a mandatory 3 business day waiting period before the lender may disburse loan funds to the school. If a lender only offers a mailed Final Disclosure (not online), then they must wait 6 days to disburse the loan to the school (3 days for mail time and an additional 3 day “rescission or “right-to-cancel” period).
Carefully review and compare loan products, and apply for the product that best suits your eligibility and needs. You may use any lender that offers private student loans.
We recommend you request a free copy of your credit report from each of the three credit bureaus (Equifax, Experian, and TransUnion), at www.annualcreditreport.com, as you are entitled annually by law. While you must pay a fee to each of the three credit bureaus to obtain your actual credit score(s), it is important to at least check your credit report(s) annually for any errors or illegal use.
Private Student Loan Application Process
- Make sure you have completed the FAFSA, accepted your annual maximum in federal student Stafford Loans, and exhausted all other financing options first.
- Consider applying with a willing, creditworthy co-signer, as doing so will likely increase your chances of approval and potentially lower your interest rate.
- Apply online (you will receive the Application Disclosure Statement)
- Complete the Self-Certification form and return to your lender
- The lender with whom the student and/or co-signer apply will conduct a pre-approval credit investigation and notify the applicant(s) as to approval or denial. If approved by a lender for a Private Student Loan, the student and co-signer will need to review the Master Promissory Note (MPN) for accuracy, sign, and return to the lender. However, most lenders offer an e-sign option online.
- Finally, you will receive a Final Disclosure Statement (allowing you up to 3 days to cancel the loan before it is disbursed to the school)
- Loan proceeds will be sent directly to the University. The proceeds will be applied to the student account to clear any balances, and remaining funds will be mailed directly to the borrower.
