Private loans help bridge the gap between the cost of education and the limited amount of financial aid available through federal programs.
If assistance beyond what is available through the federal loan programs is desired, there are several private lenders who offer alternative loans to cover educational expenses. Loan approval is generally based on creditworthiness and ability to repay – for students, a credit-worthy, employed co-signer might be required (and is strongly encouraged to get the best rates and terms).
BEFORE APPLYING FOR A PRIVATE LOAN
Consider Federal Loans
In most cases, it is advantageous for students to pursue Unsubsidized Federal Direct Loans and for parents to pursue Federal PLUS Loans before seeking private loans. A major advantage of these federal programs is that the federal government caps the interest on the loans. Additionally, alternative loans typically do not offer the same benefits as federal loans, such as consolidation, service cancellations and military repayment.
Applying for a Private Loan
For funds to be available for payment purposes, we recommend that applications be submitted by these priority dates:
- June 30 for the Fall semester
- November 1 for the Spring semester
- April 1 for the Summer semester
Please note that the credit check performed by many lenders expires after 90 to 120 days. Therefore, you should not apply for a private loan more than three months before the start of the loan period. However, because of processing time, you should apply as soon as possible within the three-month window.
FUND DISBURSEMENT
Most private loan disbursements are made via Electronic Funds Transfer from your lender to TCL. These funds are applied to the student’s account with any excess – after all tuition and fees are satisfied – being released to the student.
CHANGING LOAN AMOUNTS
You are encouraged to only borrow needed funds. If the loan approval is more than you desire, you can reduce the amount by following the directions provided by the lender on the disclosure statement you receive. Requesting an increase to a private loan will most often require submitting a new loan application to your lender.
LOAN CONSOLIDATION
Loan consolidation is not applicable to in-school financing, but it might be desirable to student with loans from multiple sources.
Factors you should consider when deciding if consolidation is right for you:
1. Are your monthly payments manageable?
If you have trouble meeting your monthly payments, have exhausted your deferment and forbearance options and/or want to avoid default, a Direct Consolidation Loan may help you.
2. Are too many monthly payments driving you crazy?
If you send payments to more than one lender every month and want the convenience of a single monthly payment, consolidation may be right for you. With a Direct Consolidation Loan, you will have a single lender—the U.S. Department of Education—and a single monthly payment.
3. What are the interest rates on your loans?
If you have variable interest rates on your federal education loans, you may want to consolidate. The interest rate for a Direct Consolidation Loan is fixed for the life of the Direct Consolidation Loan. The rate is based on the weighted average interest rate of the loans being consolidated, rounded to the next nearest higher one-eight of one percent and cannot exceed 8.25%.
4. How much are you willing to pay over the long term?
Like a home mortgage or a car loan, extending the years of repayment increases the total amount you must repay.
5. How many payments do you have left on your loans?
If you are close to paying off your student loans, it may not be worth the effort to consolidate or extend your payments.
For more information on Federal Direct Loan Consolidations, visit the Federal Direct Loan Consolidation Information Center.