What are Private Student Loans?
Private Student Loans are credit-based loans applied for through individual banks and lenders that help students "bridge the gap" between the financial aid they have been awarded and any additional amount they feel may be needed to help achieve their educational goals. Being approved for a Private Student Loan depends largely on the credit score of the borrower (and co-signer). With the continuation of tightened credit markets, the largely held belief is that the majority of students applying for Private Student Loans will need co-signers on the application in order to get approved. While rates vary widely and repayment terms generally are not as extensive as those offered on the various federal student loans, using Private Student Loans are often a wiser financial decision than using credit cards for additional educational funding. However, it is ultimately the responsibility and choice of the borrower (and co-signer) to make the best personal financial decision.
Who should consider a Private Student Loan?
Private Student Loans may be an important source of funding for students who are in one of three situations.
- Ineligible for federal student loans
- In need of loan funding beyond that which federal programs permit during the year
- Owe a balance to Saint Xavier University which occurred in a prior academic year
As of July 1, 2008, federal legislation forbids an institution from using financial aid funds from a current academic year to pay prior year balance in excess of $200. If you fall into this category and are unable to pay the prior year balance out of pocket, then you will need to consider applying for a Private Student Loan to cover the prior year balance.
Do I need a co-signer to apply for a Private Student Loan?
While there is no requirement to apply with a credit-worthy co-signer, doing so often increases both your chances of being approved for a Private Student Loan and potentially lowers front-end fees and interest rates. Most lenders require student borrowers themselves to have an excellent credit history among other criteria, so it is in your best interest to have a knowledgeable and willing co-signer assist you in applying for a Private Student Loan in most cases. Understanding that co-signers don't want to feel financially responsible throughout the life of the loan (in the event the actual borrower defaults), many lenders now offer "co-signer release" options after a certain number of on-time payments have been made, once the borrowers passes a credit check at that time.
Below is an example of what to expect if you apply for a Private Loan:
- Apply online (you will receive the Application Disclosure Statement)
- Complete the Self-Certification Form and return to your lender
- If approved for the loan, you will be provided an Approval Disclosure Statement
- Finally, you will receive a Final Disclosure Statement (allowing you up to three days to cancel the loan before it is disbursed to the school)
If you have an questions related to the new regulations, please visit the Office of Financial Aid.
How do I process a Private Student Loan application?
- Make sure that you have completed the FAFSA and accept your annual maximum in federal student Stafford Loans, and exhausted all other financing options first.
- Consider applying with a willing, creditworthy co-signer.
- Carefully review the Saint Xavier University Historical Private Lender List to compare loan products, and apply for the product that best suits your eligibility and needs.
- Submit the completed Self-Certification Form.
- 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. Most lenders will offer an e-sign option online.
- Loan proceeds will be sent directly to the University. The proceeds will be applied to your student account to clear any balances, and remaining funds will be direct deposited or mailed to the borrower if direct deposit is not setup.
You have the right to select any lender you wish for an alternative loan. Many lenders offer attractive terms and conditions which you can find by searching the Internet.
Your lender should provide you with a copy of the required Private Education Loan Self-Certification Form.
Remember to send your completed self-certification form to your lender. Your loan cannot be disbursed until your lender receives it.
The lenders listed below (in alphabetical order) have provided Private Student Loans to Saint Xavier University students in the past three years. Please click on any of the links below and begin the application process: