Private student loans
What is a private student loan?
A private student loan - also known as a college loan, an education loan or an alternative student loan - is a non-government loan made by a private lender specifically for college expenses such as tuition, room, board, books, and other associated costs.
Private student loans are based on credit score and usually require a credit-worthy co-signer. Private loans have different interest rates and fees. The pricing combination a borrower gets, if approved for the loan, is determined by the credit profiles of the student loan borrower and co-signer.
Private student loans come in two forms - certified and uncertified (also known as DTC, or direct-to-consumer student loans).
Certified private student loans require notification and verification by a school official prior to the student getting the loan funds. The school verifies that the student is not borrowing more than the total cost of education less other financial aid. Certified private loans are generally sent to the school to be applied to the student's account. Any remaining balance is returned to the student.
An uncertified private student loan does not require the school to certify the amount borrowed. Uncertified private loan funds are usually sent directly to the borrower.
Another important aspect of private student loans is the student loan co-signer. Students are often concerned about not getting a loan because they do not have a co-signer. A student loan co-signer is usually a requirement. You may not be approved without one, especially if you are an undergraduate without a credit history. Better pricing on the student loan is usually available only when applying with a creditworthy co-signer.
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© 2011, FindStudentLoans. Designated trademarks and brands are the property of their respective owners. APR rates are subject to change and are based on credit history and borrower rewards. Undergraduate and graduate private loan borrowers may typically borrow annually up to the lesser of the cost of attendance or $30,000 ($40,000 for certain schools where the annual cost of attendance has been determined to exceed $30,000). Please note borrowing amounts and limits will vary by lender and loan type. With most lenders undergraduates may choose to defer repayment of principal and interest on private loans until six months after graduation or ceasing to be enrolled at least half time. Immediate repayment and interest-only repayment options are also available. Deferment periods may vary by lender and loan type. This does not apply to all lenders and loan types. Please check with your lender before you apply to confirm their payout process and timing.