STUDENT FINANCIAL SERVICES

Announcement

Complete your 2019-20 FAFSA, now available at fafsa.gov.

Private Educational Loans

Private Educational Loans, which are not guaranteed by the Federal government, are offered by private lenders to assist student borrowers with educational and living expenses.

We strongly encourage all students to first submit the Free Application for Federal Student Aid (FAFSA) each year. 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 are not need-based; rather, they are based on creditworthiness. Most students will need a creditworthy co-signer, such as a parent or other relative, in order to obtain a private loan. Terms and conditions applicable to these loans vary greatly. Factors such as interest rate, APR, length or repayment, loan minimum and maximum, and fees should be carefully considered when researching and choosing a private loan.

Private educational loans frequently have higher interest rates over the life of the loan as well as less favorable repayment terms 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.

Choosing a Private Loan Lender

You may choose any lender who offers Private Educational loans. However, it is important that you carefully review your expenses before deciding if you need to use a private loan and the amount needed. Although the basic terms of the loan may be the same, lenders offer a variety of services to students and their families. Please note that private loan program terms are subject to change. We encourage students and their families to review and compare loan benefits between lenders and verify the current terms of any loan you are considering with the lender directly before you commit to borrow.  

Private Loan Disclosures

Federal regulations require all private education loan lenders to send three disclosure notices to borrowers and co-signers to ensure borrowers are properly informed regarding the terms and costs of the loan.  This process will lengthen the time it takes from applying for a loan until the funds are delivered to Columbia College Chicago.  The Truth in Lending Act (TILA) requires students to fill out a Self-Certification of Private Loans form.  Most lenders will provide this to borrowers.  Your Cost of Attendance and Total Aid will be shown on your financial aid award on OASIS, under the Student Financial Services tab, Financial Aid Awards. Click the link below to obtain a form if you do not have the form provided by your lender.

If you do not have the form provided by your lender, you can download the Self-Certification Award Form

2019-20 Loan Term Dates

Fall/Spring (recommended): September 3, 2019 to May 15, 2020
Fall only: September 3, 2019 to December 14, 2019
Spring only: January 27, 2020 to May 15, 2020
Summer only: June 1, 2020 to August 22, 2020

2018-19 Loan Term Dates

Fall/Spring (recommended): September 4, 2018 to May 10, 2019
Fall only: September 4, 2018 to December 15, 2018
Spring only: January 21, 2019 to May 10, 2019
Summer only: May 20, 2019 to August 10, 2019

Processing Tips

Processing time will take from 20 to 30 days from application to disbursement due to Truth in Lending regulations.
Fall/Spring loans are disbursed half in each semester.
Plan your annual financial needs and complete the loan process by August 1.

Questions to Ask When Choosing a Private Loan

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 you have one.
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.

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.

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.
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 3-4%  in fees is about the same as a 1% higher interest rate.

What is the annual percentage rate (APR)?
The APR is the total cost of a loan including the interest rate and any fees.
Are any discounts or Co-Signer Release benefits offered?

Many lenders offer benefits and discounts when repayment begins, or during the repayment term. We recommend that you research the lenders' websites and discuss any discounts offered by your chosen lender, as there may be differences between each lender.

Another option to consider is a Co-signer Release, which is a benefit that allows a student borrower the choice to remove a co-signer from the loan after a time period that the lender sets. After the co-signer is released the student borrower is the only person responsible for the loan.  

Will I be charged 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.

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.
If I repay the loan early, will I face a penalty?
Some lenders charge a fee for early repayment; be aware if your loan will charge you a penalty.
What if I have trouble repaying the loan?
Some lenders may permit you to defer payments if you are having financial difficulties. This varies considerably by vendor, especially with Private Loans. Ask your lender if this option is available.

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Student Financial Services is here to help you determine ways to finance your education at Columbia College Chicago.

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