Private Student Loans
Financing a college education is a concern for many families. Most financial aid packages will include student loans; however, federally subsidized and unsubsidized loans may not cover the total cost of college expenses. Consequently, families are faced with the challenge of meeting the cost of their expenses.
Private Student Loans, also known as Alternative Student Loans, should be explored after all other options have been exhausted. They help bridge the gap between the actual cost of your education and the amount the government allows you to borrow through the federal student loan program. Private loans are offered by private lenders and eligibility often depends on your credit score. As a last resort, families can turn to private student loans when federal student loans do not cover all of their expenses.
When to consider a private student loan
- Consider a private student loan after your federal student loan eligibility has been exhausted, but you need additional funds to cover remaining expenses.
- Consider a private student loan if you will be enrolled in a Study Abroad program and need additional funds for expenses associated with your program.
- Consider a private student loan if you are unable to enroll half time to qualify for a federal student loan.
Be aware of federal requirements on private loans
- Disclosure Forms - Lenders must provide required disclosures to the student and cosigner, if applicable, at three different times during the private loan origination process:
- Application and Solicitation Disclosure - Provided during the online loan application process or via mail included with the Promissory note.
- Approval Disclosure - Provided after the loan is approved and the lender has received the promissory note, the Application and Solicitation Disclosure, the Borrower Self Certification Form and the school certification. The applicant and any cosigner have 30 days to return the approval disclosure.
- Final Disclosure - Provided after the lender receives the Approval Disclosure from the borrower and any cosigner indicating that the loan has been accepted by the student and the cosigner, if applicable. The loan will not disburse until at least 3 business days after this disclosure is received by the borrower and any cosigner.
- Borrower Self-Certification Form – A credit-approved student borrower must submit a completed borrower self-certification form to the lender before a school certification will be requested.
- The Borrower Self-Certification Form requires information on your cost of attendance, as determined by the school you attend. Please refer to our cost of attendance chart for 2013-2014.
- Timing Requirements – These federal regulations extend the loan processing timeline so meeting deadlines for specific steps will be critical to the successful and timely disbursement of your loan funds.
Other considerations when applying for a private student loan
- Check to see how frequently your intended lender compounds interest on private loans. A low interest rate that is compounded daily is usually a costlier loan.
- Interest on a private student loan begins to accrue upon disbursement, unlike subsidized federal student loans which begin to accrue interest after you graduate, drop below half time enrollment and/or have used up your grace period. This is another reason to exhaust your eligibility for federal student loans before taking a private student loan.
- Fees charged by some lenders can significantly increase the cost of the loan. A loan with a relatively low interest rate but high fees can cost more than a loan with a higher interest rate and no fees. (Lenders that do not charge fees often roll the difference into the interest rate.) A good rule of thumb is that 3% in fees is about the same as a 1% higher interest rate.
- Federal student loans also offer better repayment and forgiveness options, another reason to exhaust your eligibility for federal student loans before taking a private student loan.
- Private loans require that you have a credit history and verifiable income; if you do not meet the qualifying requirements, a co-signer may be required. It is better to apply for a private student loan with a cosigner, even if you could qualify for the loan on your own. Applying with a cosigner usually results in a slightly lower rate, because the loans are not as risky for the lender.
- Keep in mind that private student loans are only available to students whose cost of attendance has not already been met with other aid.
Applying for a private loan
- BGSU will process an alternative loan from any lending institution. However, we have compiled a list of lenders that are most frequently used by Bowling Green State University students. FASTChoice is a private loan selection tool that can help students make a wise choice regarding borrowing an alternative loan. FASTChoice allows you to compare lender rates, terms, and benefits.
- Apply for the loan keeping in mind that credit approvals are good for only 120 days.Therefore, do not apply earlier than 30 to 45 days prior to the start of the semester. When asked to designate the loan period, check our loan period dates (in the table below) to be sure the dates you enter match with BGSU's defined loan periods.
- Your lender will send us an electronic certification to complete. At this time, BGSU will require an Alternative/Private Loan Questionnaire. This questionnaire MUST be completed electronically before BGSU will process your Private Loan certification. Check your MyBGSU To-Do list items for a link to the Alternative/Private Loan Questionnaire.
- Once the Alternative/Private Loan Questionnaire has been completed, BGSU will complete the certification and return it electronically to your lender.
- Keep in mind the new disclosure requirements (described above) will add to the processing time. Depending on your lender, the process can take 3 to 6 weeks from the time you apply until receipt of funds. Your lender will send your loan proceeds to BGSU electronically.
Loan Periods for the 2014-2015 Year
- Summer 2014 (5/12/2014 – 8/8/2014)
- Fall 2014 (8/25/2014 – 12/19/2014)
- Spring 2015 (1/12/2015 – 5/8/2015)
- Summer/Fall/Spring 2014-2015 (5/12/2014 – 5/8/2015)
- Fall and Spring 2014-2015 (8/25/2014 – 5/8/2015)