Private Educational Loans
Private Educational Loans are loans that either a student or parent/guardian may borrow through various banks, credit unions, or savings and loan associations. Private Educational Loans are not need-based; rather, they are based on creditworthiness. When considering these loans, students should bear in mind:
- The terms and conditions applicable to these loans vary greatly
- Most students will need a creditworthy co-signer such as a parent or other relative in order to obtain a Private Educational Loan
- Students need to consider the loan terms, such as interest rate, annual percentage rate (APR), length of repayment, loan minimum and maximum, and fees
Students borrowing Private Educational Loans should also keep in mind that private student loans cannot be consolidated into a Federal Direct Consolidation Loan. Private Educational Loans also may not offer forbearance or deferment options, and lenders are unlikely to offer a loan forgiveness program. The Financial Aid Office encourages students and families to pursue Federal financial aid before considering Private Educational Loans.
Conversely, students and families may view Private Educational Loans as a preferred alternative to the Federal Direct Loans. Families who wish to have their students be responsible for their education will find that Private Educational Loans allow for a student to borrow the additional funds needed to cover the cost of their education. Whatever your situation may be, borrow only what you need, and compare your options before you borrow.
Westfield State University is committed providing students and families with the best possible information regarding student loan borrowing. We have partnered with two companies to assist students and families in determining their best options when considering Private Educational Loans.
ELM
ELM Resources is the only not-for-profit mutual benefit corporation serving the student loan industry today. Their website, www.elmselect.com, offers lender comparison solutions allowing students to compare the current terms and benefits of selected lenders' loan products and provides links to the necessary disclosure statements and applications. Historical Listing of previous lenders who have serviced Westfield State University student borrowers are available and offer students the ability to compare and select the loan that best fits their needs. Over 1,800 campuses use ELM Resources to send and receive loan data for alternative loans with the lender of their choice
In choosing lenders for our list, we sent a Request for Information out through the Massachusetts Association of Student Financial Aid Administrators. All of the lenders who responded were stable, reputable lenders whom our students have used in the past, have demonstrated excellent customer service to students, offer competitive loan terms, and offer ease of application and processing for our students. Westfield State does not receive any monetary or other incentives for having these lenders on our list.
Credible
Credible is an online tool that allows students to compare personalized loans from multiple lenders. Students can analyze prequalified rates, terms, and eligibility rules side-by-side in just a matter of minutes. Credible is not a lender or bank. Credible partners with student loan lenders so that applicants have a variety of competitive options, each addressing their particular needs. Credible is completely free! You can find out more about Credible and begin the process at www.credible.com
The Financial Aid Office at Westfield State University does not endorse any lender platform or one private educational loan lender over another. We will not deny or unnecessarily delay the processing of a private education loan from a lender not on the institution's lender list. We use ELM Select and Credible as a way to deliver information to families so that they make the best possible decisions. The inclusion of these platforms does not indicate preference over lenders not included. Students may also choose to use a loan provider that does not appear in the list of lenders included at either of the links above.
Applying for a Private Educational Loan
Students and families looking to borrow a Private Educational Loan will need the following information when applying:
- current address and phone number
- social security number
- driver's license number
- employment information (if applicable)
- personal reference (name and contact information)
Cosigner
Students who do not have an established credit history will need a cosigner to obtain a credit decision. For those students who do have a credit history, a cosigner may improve your chance of approval for your loan, and may also help you secure a lower interest rate.
Steps for Applying
- Review your Application Disclosure to find general information about your loan. This is the first of three disclosures your lender is required to provide for you.
- Complete the Applicant Self Certification. You will need your Cost of Attendance and the amount of your financial aid.
- Read your Approval Disclosure. This is the second of three disclosures that your lender is required to provide for you. The information on this form is specific to you and your approved loan and will not change for 30 days.
- Watch for your Final Disclosure. This is the third and final disclosure. You must sign this document to formally accept the loan, and return it to your lender. Failure to do so will result in your approved loan being cancelled. Many private lenders are set up to accept and process this document online.
Loan funds will pay directly to the student's account on the University's scheduled disbursement date, or as quickly following said date as is allowed by Title X.
Credit Report
The approval process for a private loan will result in a "hard inquiry" placed on your credit report. Multiple applications within 30 days will only result in 1 hard inquiry, so we recommend applying to multiple lenders to find the most competitive rates. Multiple hard inquiries may reduce your overall credit score, so we recommend completing all of your applications within a two week period in order to ensure that your application processing does not flow into a second 30 day period and result in a second hard inquiry.
Concepts and Definitions
Principle - the amount you borrowed that remains unpaid, before interest and fees. -
Annual Percentage Rate (APR) - the annual cost of your loan, including the effect of any fees or charges in addition to interest.
Fixed interest rate - a fixed interest rate remains the same throughout the entire loan term.
Variable interest rate - also referred to as "adjustable rates", variable interest rates are subject to change, and could increase during the life of the loan, making the loan more expensive.
Interest Capitalization - when will unpaid interest be added to the principle of the loan? If you defer paying your loan while you are in school, you are deferring the principal, interest, and fees. Interest still accrues on the loan while you are in school and is added to the principal for you to pay back at the Annual Percentage Rate (APR). This means you will be paying interest on the interest you "borrowed." Making interest-only payments on an alternative loan while in school will drastically reduce the overall cost of the loan.