Private Educational Loan Funding Sources

Private Educational Loans are offered by a private lenders (who have no relationship with Columbia College Chicago) to assist students borrowers with educational and living expenses, in addition to federal Stafford and PLUS loans.  Private Educational loans will be included in your financial aid award and cannot exceed your Cost of Attendance.

We strongly encourage all students to first apply for the Free Application for Federal Student Aid (FAFSA).  If no other financial resources are available to bridge the financial gap, you should consider private educational loan options only after exhausting all federal, state, and institutional financial resources.

Private educational loans frequently have higher interest rates and origination fees than federal educational loans, making them more costly.  It is important to keep written records of all forms, applications, and correspondence with your lender, especially regarding discounts and special incentives, for the entire life of your loan(s).You should research all other funding options available before determining if a Private Educational Loan is the right funding source for you.

Basic Questions to Ask when Choosing a Private Loan

1. What is the loan’s interest rate?
The interest rate and fees are based on your credit score and the credit score of your cosigner, if one.
 
2. Is the interest rate fixed or variable?  
A fixed interest rate does not change. Variable interest rates change over the life of the loan.  Normally, as the rate varies, the monthly payment amount also changes.

3. What is the annual percentage rate (APR)?
The APR is the total cost of a loan including the interest rate and any fees.

4. When can the interest rate change?  
Variable interest rates are tied to a common market index. As the index goes up and down, your interest rate (and monthly payment) goes up and down, too. The change can occur monthly, quarterly or annually.  Example: if the interest rate on your chosen loan is indexed to the Prime Rate, it changes monthly.

5. Is there a cap on the interest rate?  
A cap on the interest rate prevents the variable interest rate from going above a certain level.  Most private educational loans do not have interest rate caps.

6. What fees are associated with this loan?
Fees typically fall into two categories.  Origination fees are fees charged by lenders to process your loan and are paid at the beginning of the loan period. Fees are either subtracted from the amount you are borrowing or added to your principal. Late charges are fees paid when a payment is not made within a period after which it is due.  The fees charged by some lenders can significantly increase the cost of the loan. A loan with a relatively low interest rate but high fees can ultimately cost more than a loan with a somewhat higher interest rate and no fees.  A good rule of thumb is that 3% to 4% in fees is about the same as a 1% higher interest rate.

7. Are any discounts offered?
Many lenders offer benefits and discounts when repayment begins, or during the repayment term. We recommend that you discuss any discounts offered by your lender, as there may be differences between different lenders.

8. Do I pay interest and principal while I’m in school?
Some loans do not require you to pay principal or interest while you are a full-time student or during grace periods. However, some lenders will require you to begin making minimum interest payments after the first disbursement of your loan.   Remember, the interest that accumulates on your loan is added to the amount you must repay.  The sooner you begin to make payments on your loan, the lower your overall total payments will be. Ask if your lender if your loan requires minimum payments while you are in school or during your grace period.

9. When will I be required to start making payments?
Most lenders offer a six month grace period once you graduate, leave school, or your enrollment status drops below half-time( whichever comes first) before you start repaying your loan.

10. Do I pay a penalty if I repay the loan early?
Some lenders charge a fee for early repayment; be aware if your loan will charge you a penalty.

11. What is the total amount I will repay?
The total amount to be repaid is the sum of the principal amount borrowed, interest accrued and any fees assessed over the life of the loan.

12. How much will my monthly payment be?
Your monthly payment amount will depend on the total amount to be repaid and what repayment option you select.

13. How long do I have to repay the loan?
Depending on the total amount borrowed, repayment terms for private educational loans typically range from 10 - 25 years. Usually, the higher the loan amount, the longer the term.

14. What if I have trouble repaying the loan?  
Some lenders may permit you to defer payments if you are having financial difficulties. Ask your lender if this option is available.

Choosing A Private Lender

Although the basic terms of private educational loans are the same, lenders offer a variety of services to assist our students and their families.  We encourage students and their families to visit each lender’s website to review and compare loan benefits.
Listed below are a few of the private lenders our students have used in the past.  Columbia College Chicago does not require that you choose one of these lenders, nor does it endorse any of the lenders listed.  However, since many of our students have chosen to apply through one of these lenders, our office may have a better understanding of their policies and procedures. 

Charter One             Discover           SallieMae              Wells Fargo