What are Private Loans?
Private Loans are credit-based loans, applied for through individual banks, lenders and credit unions, 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. A student, parent or other individual may be the borrower of a Private Loan, depending on the design of the loan product. Being approved for a Private 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 Loans will need co-signers on the application in order to get approved.
Since the loan terms of private products are generally not as favorable as those of federal loans, students are encouraged to exhaust federal student loan eligibility before opting for a private loan. If you have not already done so, file the Free Application for Federal Student Aid (FAFSA), so that your eligibility for federal student loans can be assessed.
While rates vary widely and repayment terms generally are not as extensive as those offered on the various federal student loans, using Private 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 Loan?
Private 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 a 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 Loan to cover the prior year balance.
Do I need a co-signer to apply for a Private 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 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 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 primary borrower defaults), many lenders now offer "co-signer release" options after a certain number of on-time payments have been made. The borrower would need to initiate the release request and pass 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 Loan application?
- Make sure that you have completed the FAFSA and considered all of your federal financing options first, including Federal Direct Stafford Loans, Graduate PLUS Loans and/or Parent PLUS Loans.
- Consider applying with a willing, creditworthy co-signer.
- Carefully review the Saint Xavier University Historical Private Lender List below, along with other lender options, 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, applicant 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 Loan, the student or applicant (and co-signer, if applicable) 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 student (if direct deposit is not setup).
You have the right to select any lender you wish for a private 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 Loans to Saint Xavier University students in the past three years. Please click on any of the links below to review Private Loan product offerings: