Private Education Loans

Private Education Loans, also known as Alternative Education Loans, help bridge the gap between the actual cost of your education and the limited amount the government allows you to borrow in its programs. Private loans are offered by private lenders and there are no federal forms to complete.

Some families turn to private education loans when the federal loans don’t provide enough money or when they need more flexible repayment options. However, since federal education loans are less expensive than and offer better terms than private student loans, you should exhaust your eligibility for federal student loans before resorting to private student loans.

Many students take out private education loans in order to finance their education. With that, it’s best to get as much information as possible before you begin the process.

Federal student loans include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans. In contrast, private loans are generally more expensive than federal student loans.

The chart below provides a summary of the differences.

Federal Student Loans Private Student Loans
No repayment necessary until you graduate, leave school, or change your enrollment status to less than half-time. Many private student loans require payments while you are still in school.
The interest rate is fixed and is often lower than private loans—and much lower than some credit card interest rates. View the current interest rates on federal student loans. Private student loans can have variable interest rates, some greater than 18%. A variable rate may substantially increase the total amount you repay.
Undergraduate students with financial need will likely qualify for a subsidized loan where the government pays the interest while you are in school on at least a half-time basis. Private student loans are not subsidized. No one pays the interest on your loan but you.
You don’t need to get a credit check for most federal student loans (except for PLUS loans). Federal student loans can help you establish a good credit record. Private student loans may require an established credit record. The cost of a private student loan will depend on your credit score and other factors.
You won’t need a co-signer to get a federal student loan in most cases. You may need a co-signer.
Interest may be tax deductible. Interest may not be tax deductible.
Loans can be consolidated into a Direct Consolidation Loan.  Learn about your consolidation options. Private student loans cannot be consolidated into a Direct Consolidation Loan.
If you are having trouble repaying your loan, you may be able to temporarily postpone or lower your payments. Private student loans may not offer forbearance or deferment options.
There are several repayment plans, including an option to tie your monthly payment to your income. You should check with your lender to find out about your repayment options.
There is no prepayment penalty fee. You need to make sure there are no prepayment penalty fees.
You may be eligible to have some portion of your loans forgiven if you work in public service. Learn about our loan forgiveness programs. It is unlikely that your lender will offer a loan forgiveness program.
Free help is available at 1-800-4-FED-AID and on our websites. The Consumer Financial Protection Bureau’s private student loan ombudsman may be able to assist you if you have concerns about your private student loan.

Some of the major considerations involved in choosing a private lender include cost, flexibility and customer service.

We advise you to only borrow what is truly needed to pay for qualified educational expenses. When borrowing to finance your education, you should give serious consideration to the loan amounts needed throughout your entire education.

You will want to make sure you can comfortably afford your student loan indebtedness based on your expected income upon entering repayment, as well as make sure you are comfortable with the estimated expected monthly payment.

How do I apply for and process a Non-Federal Private Student Loan application?

  • Make sure you have completed the FAFSA and accepted your annual maximum in Federal Direct Student Loans, and exhausted all other financing options first.
  • Consider applying with a willing, creditworthy co-signer, as doing so will likely increase your chances of approval and potentially lower your interest rate.
  • Choose a lender.  You have the right to select the private lender of your choice whose loan products best suit your eligibility and needs. ELMSelect is a private loan search engine where you can search and compare different lenders and loan products. Neither Concord University nor the Office of Financial Aid intends any specific endorsement of these lenders. www.elmselect.com
  • Submit the completed Self-Certification Form. If your lender does not use ELM for certification.
  • The lender with whom the student and/or co-signer apply will conduct a pre-approval credit investigation and notify the applicant(s) as to approval or denial. If approved by a lender for a Private Student Loan, the student and co-signer will need to review the Master Promissory Note (MPN) for accuracy, sign, and return to the lender. However, most lenders offer an e-sign option online.
  • Loan proceeds will be sent directly to the University. The proceeds will be applied to the student account to clear any balances, and remaining funds will be direct deposited or mailed directly to the borrower if direct deposit is not setup.