Private student loans, also known as “alternative loans,” are made available to students through banks, credit unions and other financial institutions. Although regulated by the federal government, these loans are not subsidized or guaranteed by the government. They are a private arrangement between you and the lender. Consequently, the terms and conditions of the loan will vary from lender to lender and University of Massachusetts Global does not recommend any particular lenders. Instead, we suggest you evaluate several loan options to obtain the loan that is best suited to meet your needs.
Among the factors, we advise you review:
- Loan Eligibility Rules: All lenders require credit checks, but standards for credit ratings vary. Some lenders may require co-signers. Some lenders require students be enrolled in specific majors or graduate programs. There may be requirements that borrowers enroll full time, possess specified minimum GPAs, have incomes above a defined amount, and so forth.
- Loan Amount: Federal rules may limit the amount you can borrow, but lenders also can restrict the amount they wish to lend.
- Interest Rates: Interest will typically be charged from the time the loan is taken out. Be mindful if interest rates are variable or fixed. Compare the annual percentage rate (APR). Some lenders will reduce interest rates if you elect to automatically debit your bank account or you earn their trust with a specified number of on-time payments.
- Loan Fees: Most lenders will charge loan fees based on the policy of the lender. Among fees to consider are loan origination fees, processing fees, late payment fees, and penalties and adjustments to principal based on defaults or late payments.
- Repayment Terms: Some loans may require repayment on the beginning on the month following the date the loan proceeds are received. Most lenders, however, will defer payments (but not interest) while you are attending school. There may be deferment of payment for other reasons such as financial hardship. The length of time required for full payment of the loan could differ among lenders.
- Loan Forgiveness: Some loans have provisions for cancellation upon the death or permanent and total disability of the borrower.
- Loan Servicing: Some lenders service loans from locations outside your state of residence. Prompt, accurate information from your lender is important. It is also important that you borrow from a lender that will work with you should you experience difficulty making loan payments.
- Sale of Your Loan: Lenders sometimes sell student loans to secondary markets, and you may be required to repay your loan to a company different from the one that originally lent you the funds. Selling your loan in no way alters the terms of the loan, so your payment schedule, interest rate, rights to deferments and forbearance remains unchanged. If your loan is sold to a secondary market, at the time of sale you will be notified.
You may borrow funds from any eligible lender, and the Financial Aid Office will process the request accordingly. The easiest way to obtain information about loan terms and apply for a loan is to visit the lender’s website, rather than visiting the local branch office. You can always call using their toll-free telephone number and request a loan officer specializing in private educational loans.
Each lender will require a different application procedure. All lenders, however, are required by the federal government to obtain a completed "Private Education Loan Applicant Self-Certification". After you apply for a loan (customarily online), and the lender approves your loan, the lender will request that UMass Global verify your enrollment, tuition charges, and some other demographic information. This request is typically made electronically and UMass Global will respond promptly. The entire process from submission of your application to disbursement of loan funds into your student account could take as long as four weeks, so please allow sufficient time. A small number of lenders do not wish to exchange data and transfer funds electronically. If you choose to borrow from one of these lenders, the process may take six weeks.
Lenders are important sources of information about their loans, but UMass Global is also here to assist you. Please contact your One Stop Specialist should you desire more information about the loan application process. A private student loan should be a last resort of funding. We encourage you to exhaust all federal student aid sources before pursuing this option.
