Private Loan Overview
Private loans are available to students who are not eligible for federal financial aid or who need additional funds to meet educational expenses; however, Federal Title IV funds may be more favorable than private loans. Private loans are expensive and should only be borrowed when all other resources, such as Stafford or PLUS loans, have been exhausted. These loans do not offer the same benefits as Federal Financial Aid and are subject to higher interest rates because they are not guaranteed by the federal government. Since this type of loan is based on credit history, it may require a cosigner.
Private Loan Lenders
After clarification from the Department of Education concerning the federal regulations on providing information to students regarding specific lenders and preferred lender arrangements, our office will no longer post or verbalize to students the names of private loan lenders. Students are encouraged to visit multiple lenders’ web pages to verify the interest rate, repayment options, fees charged, and borrower benefits. Our office does not endorse any lenders, receive any incentives, or have any arrangements or agreements with any lenders.
Considerations When Selecting a Lender
Applications and Eligibility
Requirements vary according to lender. Some of the most common borrow requirements are as follows:
- must be an undergraduate or graduate student in a degree or certification program
- must be enrolled at least half-time
- must be a credit-worthy borrower or a borrower with a credit-worthy cosigner
- must maintain Satisfactory Academic Progress
- must be a U.S. citizen, permanent resident, or eligible non-citizen
Interest Rates and Fees
Interest rate options vary. The interest rate options may be fixed or variable rates. Many education loans involve fees. Fees are usually added to the amount requested to borrow, but sometimes they are deducted from loan proceeds. Borrowers should consult their lender and read their promissory note carefully to determine the interest rate and fees associated with their loan.
Repayment and Deferment
Lenders are often willing to allow deferment of payments while the borrower is enrolled in school at least half-time. During this time, interest may accrue, but the student does not need to make any monthly payments. Students should contact their lender for specific options.
Borrower benefits can significantly alter the cost of a loan. Students should research the fine print on a lender’s borrower benefits and keep up their end of the bargain.
Finding a Lender
Students should start their search for a reputable lender with their their bank, credit union, or other financial institution. Students should always compare several loan options or lenders.
Employers sometimes help families pay for children’s education by offering financing options of their own. For example, some employers help employees with education expenses such as education through private loans, automatic deductions from paychecks, and other financing options.
Use the Internet to search websites that list alternative (private) loan lenders.
Questions to Ask
- Can the application be completed online?
- What is the approximate time it takes to obtain a decision for loan approval?
- Is a cosigner required?
- What is the minimum and maximum loan amount per year?
- Are there minimum enrollment requirements?
- Can I borrow for past due balances?
- Do I need to be enrolled in a degree-seeking program in order to qualify?
- Is the interest rate fixed or variable? If variable, how frequently can the rate change?
- Are there any loan fees?
- Does the interest rate change when I enter repayment?
- What fees are applied to the loan and when and how are they applied?
- When does repayment begin? What will be my monthly payment?
- Is the interest and/or principal deferred while I am in school?
- What are the repayment options and are they any repayment benefits?
Private Loan Application Process
Step 1: Speak with Financial Aid at LSU
Consult with Financial Aid at LSU to determine your eligibility for Federal Title IV assistance to ensure that you have exhausted all other funding options prior to applying for a private loan.
Step 2: Complete the Waiver of Federal Aid
If you choose not to pursue the Federal Title IV assistance available to you, you will need to complete and submit a waiver of federal aid.
Step 3: Get Pre-Approved by your Lender
Complete the Application & Pre-Approval Process with the lender of your choice. The lender will notify our office if you have been pre-approved and request certification.
Step 4: Complete a Self-Certification Form
This can be completed electronically with your lender, but some lenders may not have this option available to you. Once the Self-Certification Form has been completed, you must mail it to your selected lender.
Step 5: Cost of Attendance Verification
LSU will check your eligibility. If you are eligible, our office will certify the loan amount you have requested not to exceed your cost of attendance.
Alternative loan applications may ask that you enter a requested loan period, or the dates for which you need a loan. Use the Loan Periods chart on the Federal Loans page.