Private loans (or alternative loans) are non-federal, credit-based education loans borrowed from a private lending institution that must be repaid. The loans are typically issued in the student’s name with a required cosigner. The maximum amount a student may borrow is the cost of attendance minus any other financial aid or the maximum limit established by the lender. Families are encouraged to fully explore federal loan options, (e.g. Perkins, Direct Subsidized, Direct Unsubsidized and Direct Parent PLUS Loans), before securing a private loan due to the benefits and consistencies that the federal loan programs provide. Funds are posted to the student’s account each semester following enrollment verification, which generally occurs after the second week of the semester.
Selecting a private education loan and lender is a personal decision. The Office of Financial Aid strongly recommends researching private education loans and lenders before completing a loan application online or signing any loan paperwork. Research should include a comparison of interest rates, fees, repayment terms, and the level of customer service provided by the lender.
Compare Federal Direct Loans vs Private Educational Loans at StudentAid.gov.