Private student loans are offered to students by private lending institutions as an option if additional funding is needed to supplement your state and federal aid. Before you consider borrowing a private student loan, we recommend you inquire about federal student loans, which generally have better terms and lower interest rates.
You should consider a number of factors before applying for a private student loan, such as:
• Private student loans usually have higher interest rates and interest accrues while the student is in school.
• Students must have a good credit history to obtain private student loans. You may need a credit worthy co-borrower to receive a private student loan.
• The interest rate on your private student loan is variable and dependent upon your credit history and, if applicable, your co-borrower’s credit history.
IUPUI will certify your private loan with the lender of your choice. Once you have been approved by your lender and your loan is ready to be certified, your lender will notify our office directly. We will process your private student loan if you meet the eligibility requirements, and then we notify your lender of our certification of your loan.
Generally, the certification to disbursement process will take an additional 10 - 15 business days, because it must also include a rescission period when the borrower may cancel the loan. This process could be slightly longer during peak times. Watch your OneStart account to see when the loan has been processed by our office. You must continue to meet the eligibility requirements once the funds arrive in order for the funds to apply to your bursar account.
If we are unable to process your private loan you will be notified through your university email account.
Advantages of having a Co-Signer
Most private education lenders require student borrowers to have a cosigner for their loan. In addition to increasing your chances of getting approved for the loan, having another person cosign for your loan sometimes helps you get a lower interest rate and may reduce the time it takes to get the loan approved.
Your cosigner does not have to be a relative, but he or she should be someone who has a steady income and a good credit history. Some lenders will release the cosigner from the loan after a period of time if the student borrower has met certain requirements such as making payments on time.
New Truth in Lending Requirements
New provisions in the Truth in Lending Act, implemented in February 2010, have resulted in a number of changes in the process for applying for and receiving private education loans, including long-term U-loans and Health Professions Loans. Lenders who provide these loans must comply with the following requirements:
• Lenders must provide three separate loan disclosures to borrowers--one at the point of application, one when the loan is approved, and one before the loan is disbursed.
• A waiting period of three business days is required between the time the borrower receives the final loan disclosure and the time that the loan is disbursed to the university.
• Students must also sign a self-certification form and submit it to the lender before the loan can be disbursed.
• Your lender should provide you with all of the necessary information about these requirements, but if you have questions, feel free to contact our office.
If You Need To Select A Lender
You have the right to select any lender you wish for a private loan. Lenders offer different terms and conditions, which you can find by searching the internet. IUPUI is not endorsing or promoting any lender, but providing a list of those that IUPUI students have borrowed from in the past year.
IUPUI cannot certify loans that are submitted too early. Please use this guide to determine the earliest acceptable application date:
• June 15th for a Fall/Spring loan
• November 15th for a Spring only loan
• March 15th for a Summer loan
Private Loan Programs
IUPUI students borrow from a variety of private lenders. These lenders are listed in alphabetical order and are in no way ranked by IUPUI. We do not recommend any particular lenders. This list is merely provided to assist you in looking for a private loan that best fits your need. Most lenders will only loan to degree-seeking students. If you are non-degree seeking, you will need to check with the lender to see if you are eligible.
Students borrowed from the following loan programs and providers:
Please note that students must apply directly with the lender for a private loan. We have linked to each lender’s website as a courtesy, again, not to promote one lender over another.
A Word of Caution to Private Loan Borrowers IUPUI cautions students that "loan debt can accumulate quickly and result in a lifetime burden of high payments and credit denials for automobile purchases, credit cards, and home mortgages. To avoid these problems, read and understand the terms and conditions of all loans." To assist you with understanding the implications of your decisions, IUPUI has partnered with CashCourse to provide students with free financial resources. You may go to IUPUI’s CashCourse website by clicking here:
Comparison of PLUS Loans and Private Loans
The chart below shows the range of terms typically offered by private lenders compared to the terms of the federal PLUS Loan and Grad PLUS Loan.
Federal Direct PLUS Loan and Grad PLUS Loan
Private Education Loan
Questions to Consider
U.S. Department of Education (federally funded) PLUS Loan:Click here for application information Grad PLUS Loan:Click here for application information
Various banks and loan companies
Will the company sell your loan to another company?
How long has the company been offering student loans?
Eligible Borrower and Loan Amount
PLUS: Parent borrows on behalf of undergraduate dependent student enrolled at least half-time in a degree or certificate program. Parent and student must be U.S. citizens or eligible non-citizens. Student must not be in default on prior educational loans and must be making satisfactory academic progress. Student does NOT have to complete the Free Application for Federal Student Aid (FAFSA), unless applying for other aid. Grad PLUS: Graduate student who is a U.S. citizen or eligible non-citizen enrolled at least half-time in a degree or certificate program. Must be making satisfactory academic progress. Borrower must complete the Free Application for Federal Student Aid (FAFSA) to be eligible. Loan amount: Cost of attendance minus financial aid offered. No cumulative loan maximum.
Student who is a U.S. citizen or permanent resident.
Loan amounts often are cost of attendance minus financial aid offered. Often include a yearly and/or cumulative cap.
Interest Rates and Fees
Fixed interest rate of 7.9% (See ww.ed.gov/offices/OSFAP/ DirectLoan/calc.html).
0.25% interest rate reduction with electronic auto-debit payments.
2.5% origination fee (4.0% fee with a 1.5% rebate if first 12 monthly payments are made on time). Grad PLUS: Interest begins accruing immediately; may be paid periodically or capitalized.
Fees range from 0% to 12%, depending on borrower's credit. Some have origination fee. Interest rates generally PRIME -1% to +7.75% or LIBOR +1% to +8%.
What is the interest rate of the loan? Is it fixed or variable? If it is variable, does it have a cap?
How is the interest rate calculated and capitalized?
Does the lender charge any fees?
Repayment of principal and interest begins 60 days after disbursement.
Repayment period up to 25 years.
No penalty if prepaid.
Multiple repayment plans are available. PLUS: For PLUS loans first disbursed after July 1, 2008, parents have the option of deferring repayment until six months after the dependent student is no longer enrolled at least half-time. To request deferment, call 1-800-848-0979.
Grad PLUS: Can opt to pay interest and principal while in school or interest and principal can be deferred while borrower is enrolled at least half-time (borrower must request an in-school deferment).
Ranges from 0 to 25 years, often depending on amount of loan
When does repayment begin? If payments begin immediately, can you afford to make the monthly payments? If payments begin later (deferred), do you understand how the interest will be calculated?
Basic credit check required: Borrower cannot be 90 days or more delinquent on the repayment of any debt (with additional flexibility for mortgage or medical debt) or the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment or write-off of a Title IV debt during the last five years. Consolidation: Both loans can be consolidated; Grad PLUS Loans can be consolidated with other federal loans.
Co-signer may be required and/or may reduce interest rate and loan fees. Interest rates, fees, and loan limits depend on credit history of borrow/co-signer, loan options, and repayment schedule.
What do student blogs say about the company? This is one of the best way to gauge a company's customer service reputation. Customer service might not be important to you now, but it will be when you begin repaying the loan.
Remember: Borrow only what you absolutely need. What you borrow today you will need to pay back later (with interest). It is up to you to borrow responsibly.
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