Regarding Alternative Educational Loan Options
Private student loans should only be considered after applying for federal aid and reviewing your offer letter.
These loans are nonfederal loans, made by a lender such as a bank, credit union, or state agency.
They typically have higher interest rates and fewer repayment plans than federal loans.
An important note regarding student loan funding:
At Colorado State University, we encourage you to make informed decisions when taking out a student loan, and to only borrow the amount of funds needed to successfully complete your education.
What to Consider Before Borrowing
Federal Student Loans
Private Student Loans
Repayment begins 6 months after you graduate, leave school, or drop below half-time.
Private student loans could require payments while you are still in school.
Interest rates are fixed and could be lower than private loans and credit cards.
Private loans can have fixed or variable interest rates, some above 18%.
Undergraduate students with financial need will likely qualify for a subsidized loan where the government pays the interest while you are enrolled half-time.
For private loans, interest is accruing while you are in school.
With the exception on PLUS loans, federal loans don’t require a credit check.
Private loans require a credit check. The interest rate will depend on your credit score and other factors.
You don’t need a cosigner on federal loans in most cases.
You may need a cosigner to successfully apply for a private loan.
Interest may be tax deductible for federal loans.
Interest may be tax deductible for private loans.
You can consolidate all of your federal loans.
You cannot consolidate private loans with your federal loans.
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.
Multiple repayment options for federal loans.
Check with your lender to see what repayment options are available for your private loan.
There is no prepayment penalty fee for the early payment of a federal loan.
Prepayment penalty fees may exist for private loans.
You may be eligible to have some portion of your loans forgiven, depending on circumstances.
It is unlikely that your private loan lender will offer a loan forgiveness program.
The Application Process
- Colorado State University does not endorse or recommend one lender over another, and cannot provide a list of lenders because of the wide range of terms offered by individual financial institutions.
- We encourage you to check if your personal bank offers an alternative loan, and to also use mainstream internet resources to search for and review lenders.
- We will certify a loan through any lender, if you meet that lender’s eligibility criteria.
- While we cannot endorse specific lenders, there are numerous private loan options available online and through local banks and credit unions that could potentially assist you in reaching your educational goals. By researching and comparing different lenders, you can find competitive interest rates, repayment terms, and benefits that align with your financial situation.
- Online platforms provide a convenient way to explore various loan options, offering tools to compare rates and terms side by side. Local banks and credit unions also offer personalized service and may have special programs or benefits for members.
- However, it’s essential to approach private loans with caution and fully understand the terms and conditions before committing. Make sure to borrow only what you need and explore all avenues for scholarships, grants, and federal aid before turning to private loans.
- Some lenders offer loans for parents or other creditworthy individuals to borrow on behalf of the student.
- During the application process, your lender will require that you submit a Self-Certification form. This form will ask for information about your cost of attendance and estimated financial assistance to help determine the amount of your loan.
- Borrowers are protected by the Truth in Lending Act (TILA).
Timeframes for Processing Alternative Educational Loans
- If you decide you want to apply for a private loan, your lender will send a certification request to the Office of Financial Aid and they will review your eligibility based on your lender’s requirements.
- Certifications are generally reviewed within one week from the day we receive it from your lender. Watch your RAMweb account to respond to the required certification questions.
- You will have a requirement posted to your RAMweb regarding your loan certification once we have received this request from your bank.
- Provided that you are eligible for the loan, funds are disbursed from your lender to your student account.
- The timing of disbursement will vary from lender to lender. At minimum, your loan will disburse no sooner than 10 days prior to the first day of classes or at least three business days from the time your lender sends you the Final Disclosure notice, whichever is later.
Loan Cancellation
To learn more about how to cancel your third-party/ alternative/ private educational loan, please check out our webpage on Cancelling Loan Funding.
