Points to Consider
Below we have provided definitions and facts, and questions to ponder as you begin to identify a loan product that is a good fit financially. We encourage all of our students and families to carefully research lenders before selecting a private loan each year. Lender offerings, as well as your financial needs, can change year to year. You should always feel well informed, comfortable and confident about all the financial choices you make.
Academic Standards: While your lender isn’t checking your grades, they do rely on the school to verify whether or not you are meeting the minimum academic standards established at the College. If that is a requirement of the loan, then we will check your academic standing before certifying the loan. If you fall below minimum academic standards, it could impact your ability to stay with the lender of your choice going forward. We advise you to inquire whether meeting the College’s minimum academic standards are a requirement before applying for any private loan.
Annual Percentage Rate (APR): The APR is the annual cost of your loan which includes interest, fees and other charges. If your interest rate is variable, as most private loans are, the APR will change frequently during the life of the loan. The APR should not be the sole factor used to evaluate a loan product. Other items like borrower benefits and loan repayments (to name a few) also should be considered.
Budget Worksheet: Our budget worksheet is intended to help students and families estimate out of pocket expenses (i.e., net price) once financial aid has been applied towards charges. Knowing your net price can help you finalize a private loan amount. This worksheet is located under the publication section.
Consolidation: A loan consolidation allows you to combine several loans into one. The result is a single monthly payment instead of multiple payments. While consolidating your loans could lower your monthly payments, you also might be giving up other cost saving benefits tied into the original loans (e.g., varied repayment schedule, interest rate discounts, principal rebates, or some cancellation benefits). Does the lender you are interested in offer this potential cost saving measure?
Co-signer: As lenders tighten their credit standards, it can be a bit more challenging to get a loan approval on you own if you have little or no credit history. While not every lender requires it, most encourage you to secure a co-signer during the application process. It can have many benefits, including a greater chance of getting a loan approval, possibility of a lower interest rate, and an opportunity to establish a credit history. A co-signer is equally responsible for the loan, however, some lenders will release them from their obligation if certain criteria are met (e.g., student completes their academic program; a certain number of on-time payments have been made). Check with the lender to see if they offer a co-signer release option. If you are having trouble obtaining a co-signer, ask the lender what options are available to those unable to secure a co-signer. Will that option increase your interest rate?
Cost of Attendance: Knowing your cost of attendance can help you understand overall costs associated with attending the College. Once admitted to the College, prospective students can find the Cost of Attendance in the upper right hand corner of their award letter. Current students can find their Cost of Attendance in the Financial Aid Section of CyberFriar under “Award Overview”.
Credit Score: When applying for private loans, make sure you only apply for one at a time. Each time a lender runs your credit, at your request, it appears on your credit report as an inquiry. Applying for several loans at the same time could have a negative impact on your credit score. Remember, a lender is looking for a good credit history and a low debt-to-income ratio.
Customer Service: Can you apply online? How accessible is your account information? Do they have a location with walk-in service near you? In addition to finding a lender that meets your financial needs, you need to find a lender that meets your accessibility needs. Are they responsive and informative, and available when you are? Before entering into a financial relationship, it is important to know all the avenues available to connect with the lender. Keep contact information, hours and location handy during your decision-making process.
Direct Charges: Direct charges are charges that appear on your bill, such as tuition, fees, and room and board (if applicable). Prospective students, who have been admitted to the College, can find their Direct Charges in the upper right hand corner of their award letter. Current students can find their direct charges by logging into their CashNet account or by visiting the Bursar’s Office. Knowing your direct charges can help you understand the exact costs associated with attending the College.
Educational Tools & Support: Money management is just as important after you leave school as when you were attending. Does the lender offer any financial awareness counseling or tips that will help you manage your money so you can meet your household expenses and make on-time loan payments? Ask the lender what types of educational programs/resources are offered to support you throughout the repayment process.
Financial Aid Award: Knowing the types and amounts of financial assistance offered to you can help you decided what loan amount you may need to borrow through a private lender. Prospective students can obtain their financial aid information from their award letter. Current students can find their award information in the Financial Aid Section of CyberFriar under “Award Overview.”
Forgiveness/Cancellation/Discharge: You must repay your loans even if you don’t complete your education, can’t find a job related to your program of study, or are unhappy with the education you paid for with your loan. Certain circumstances, however, might lead to your loans being forgiven, cancelled, or discharged. The lender should be able to explain to you the circumstances under which a loan could be forgiven, cancelled or discharged.
Forbearance/Deferment: Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily postpone or reduce your loan payments. Postponing or reducing your payments may help you avoid defaulting on the loan. You’ll need to work with your loan servicer to apply for deferment or forbearance; you must continue to make payments on your loan until the deferment or forbearance is in place. Inquire with the lender under what conditions your loan could be postponed.
Interest Capitalization: Consider whether you have the option to pay or not to pay the interest while in school. Paying interest on your loan while you’re in school can save you money and help you pay off your loan faster. Any unpaid interest may be capitalized (added to your principle balance). More importantly, you should ask when the interest is capitalized. If the interest is capitalized quarterly or annually, it will cost you more than if it is capitalized once at repayment.
Interest Rate: It is important to know what type of interest rate is being offered. If your rate is variable, as most private loans are, it is equally important to know what is used as a base on the interest rate [Prime or Loan Interbank Offer Rate (LIBOR)] and how each fluctuates (i.e., monthly, quarterly). Knowing how an interest rate is calculated will help you determine if having a fixed or variable rate is best for you. Keep in mind private loans are not federally guaranteed; therefore, there is NO CAP on the interest rate.
Lender or Loan Servicer: Throughout your research you could see a variety of names among the multitude of paperwork received. It is very important to identify what role each organization is playing. This will allow you to understand the process better and possibly get answers faster. A lender is the entity that made the loan initially and a loan servicer is the company that collects payments on a loan, respond to customer service inquiries, and performs other administrative tasks associated with maintaining the loan on behalf of the lender. It is the latter – the loan servicer - you ultimately deal with the most.
Loan Amount: Ultimately, how much you want to finance is up to you. When deciding on a loan amount you could Borrow Your Net Price. Net price is the amount of money you need to pay the College after financial aid has been applied against direct charges. Make sure you know whether or not the lender charges any up-front fees. If they do, you may need to borrow slightly above your net price to avoid owing money to the College after the loan has been applied. When deciding on a loan amount, you could Borrow The Maximum Amount. The maximum loan amount you can borrow is your total cost of attendance minus any other financial aid or resources you are receiving. This affords you the opportunity to borrow a little more than your net price in order to help defray other costs you may incur throughout the academic year (e.g., books, personal expenses) and account for any possible up-front lender fees. When deciding on a loan amount, you could Borrow Any Amount. You are not under any obligation to finance the entire amount owed to the College (after your aid has been applied). You can combine several financing methods (cash, payment plans, etc.) to meet your out-of- pocket costs.
Loan Calculator: Before you commit to a private loan product, run some figures to see what the loan will really cost you. Check out this loan calculator offered through FinAid. Knowing what your monthly repayment might look like will help you choose a loan product that is right for you.
Loan Period: While not required, we encourage families to select a loan amount that would cover any balance due for the entire academic year. Making sure the loan period runs from September through May cuts down on the number of applications you need to submit to the lender and reduces the risk of being denied in a subsequent application. Remember, the maximum loan amount you can borrow is the total cost of attendance minus any other financial aid or resources you are receiving.
Loan Fees: It is important to know if a lender charges loan fees. If fees are added you should know at what point in the processing they are assessed. Are the fees charged at the time of disbursement (therefore reducing the gross amount sent to the school) or added to the principle loan amount borrowed? The answer to this question could have an impact on the loan amount you consider.
Minimum Eligibility Standards: Private lenders can establish any conditions they want to their loan agreements/contracts. Check to see what limitations or minimum requirements are required in order to submit an application. A lender may require you to be a full-time, undergraduate, degree seeking, making academic progress, non-international student. However, many lenders do not have as many conditions and do make loans available to those who are non-degree, graduate/certificate seeking, not making academic progress, less than full-time students. Further, many lenders permit loans to be applied towards a past due balance. Generally, the more flexibility, the better. Carefully read the eligibility criteria of each loan product you are interested in to determine whether you are eligible before you spend additional time researching the loan product.
Net Price: Net price can be different for each person. Prospective students admitted to the College can obtain their net price from the bottom of their award letter. Current students will need to complete the budget worksheet to calculate their net price. Knowing your net price can help you finalize your private loan amount.
Repayments: Most student loans enter repayment after graduation. What repayment plans does the lender offer (i.e., standard repayment, graduated repayment, income-based repayment)? Generally, the more options available, the better. A standard repayment plan may be doable upon graduation, however, if any unforeseen financial circumstances arise (i.e., job loss/change) you may need to contact your lender to access one of their other options. Also, ask the lender whether paying off the loan early will result in pre-payment fees.
Repayments Incentives: Will the lender offer you a lower interest rate if you enter repayment immediately (i.e., after the loan is fully disbursed)? Will the lender reward you with a lower interest rate when you sign up for automatic payments? Can you lose these incentives and if so, what does that look like (e.g., do you have to pay them back)? Remember, being offer repayment incentives does not mean that the loan has the best terms and conditions. A lender may opt not to offer incentives and instead offer a lower interest rate or no fees from the start.
Selling of Loans & Information: Does this lender sell off its loan? If so, to whom? This is important information to know before entering into a financial relationship. It could be harder for you to stay on top of your loan payments or have your questions answered if your loan is sold to someone to whom are unfamiliar. Also, will the lender sell your information to third parties or market products to you not originally applied for? Your personal information and privacy are important to you and you want to be assured that the lender will protect it.
Timing of Selection: It takes approximately 21 business days to complete the entire private loan application process with a third party lender and the College. We strongly encourage you to make sure your application has been initiated in enough time to ensure the loan has been approved and funds have been forwarded to the College by the date on your billing statement. Peak processing time is June through September; however, loans can be applied and processed at any time throughout the academic year.