Private loans are non-federal educational loans. These loans are typically offered by private lenders (educational financing institutions, guaranty agencies, banks) to assist with educational and living expenses not covered by other financial aid. In general, you may borrow up to the cost of education minus all other financial aid you receive.
For many students and parents, private loans represent an important resource to help finance educational expenses. Private loans can help fill the gap between need-based financial aid and your total educational costs. Private loans also can help with “one-time” educational expenses, such as studying abroad. Before considering a private loan, make sure that you have taken advantage of all your federal student loan opportunities.
Selection of a private lender is an important decision, and you should carefully research your lender. DePaul does not enter into student loan lending agreements or arrangements with external agencies, nor does it enter into any agreements with agencies outside the United States. This is important to know if you are an international student or a student considering international study.
Things to Know Before You Apply for a Private Loan
The maximum amount of your loan
Requesting a loan for a past-due balance
Determining your loan period
Your level of enrollment
Repayment
Interest rates
Fees
Choosing a Lender
You should carefully review your expenses before deciding whether you need a private loan. Choosing a private loan is a personal decision and DePaul University has partnered with ELMSelect to offer a tool to assist students and families. ELMSelect is a tool that allows you to compare lenders that specialize in your area of study, rates, and conditions, and if needed, select a loan product that best fits your needs. The ELM tool includes various filter options to help in your review as well as highlighting the private lenders used by DePaul students in the past five years. New lender loan products may be reviewed annually for student borrower benefits. DePaul does not recommend any particular private lender and does not have a preferred lender list. As you determine if a private loan is for you, use the questions below to compare lender products in ELMSelect:
- Whom do I contact when I have a question or a problem about my loan?
- What are the current interest rates?
- How often do these rates fluctuate?
- Is there an interest rate cap?
- Are there any fee reductions, interest reductions or other incentives offered during the life of the loan?
- Do the loan interest rates (or other incentives) change based on my credit, academic level or whether I have a co-signer?
- When are late charges assessed? How much are these charges?
- How is the interest on my loan capitalized — quarterly, annually or only at repayment?
- What are the repayment terms?
- Are there any penalties for pre-payments, late payments or any other reason?
- Are death and disability discharge options available under those circumstances?
Loan Application and Approval
Once you choose a lender, you’ll need to complete the application process. Most lenders offer online and/or phone applications. In general, the lender will run a credit check before it agrees to offer you a loan. If you fail to pass the credit check, the lender may give you the option to reapply with a creditworthy co-signer. Most lenders also will offer counseling to determine why you failed and provide guidance for correcting your credit. Applying for a loan with a creditworthy co-signer is always a good idea, as lenders may offer incentives such as a lower interest rate or reduced fees. Be sure to inquire about this possibility with your lender.
Because credit is the main component in a private loan approval, you may want to obtain a copy of your credit report for yourself. You can obtain that information using Annual Credit Report or by contacting any of the credit bureaus listed:
| Bureau | Telephone | Web |
|---|---|---|
| Equifax* | (800) 685-1111 | equifax.com |
| Experian* | (888) 397-3742 | experian.com |
| TransUnion* | (800) 888-4213 | transunion.com |
*You may be charged a fee to access your credit report from these credit bureaus
Final Steps
- Fill out the lender’s application. Your lender will review your application and will do a credit check.
- Complete the promissory note process required by your lender.
- Provide any additional documentation your lender may require from you and/or your co-signer.
- You are required to complete and submit a Private Education Loan Application Self-Certification Form to your lender. You can obtain this form from your lender; if you are unable to obtain one from your lender, please notify the Office of Financial Aid.
- Follow-up with your lender to make sure you (and your co-signer) have submitted all required documentation.
Your lender will electronically transmit (or fax) a request for school certification to DePaul once your private loan is approved and all steps have been completed. Our office will verify enrollment, along with the loan period start and end dates, to ensure your requested loan amount is within your financial aid budget. We may be required to adjust accordingly. DePaul will not be able to certify your loan until all the required documentation has been submitted to the lender.
Disbursement
Most lenders distribute private loan funds electronically. In some instances, however, lenders send funds to DePaul via paper check that you may then need to endorse. We will contact you if you are required to sign the check before the loan can be deposited and disbursed.
Lending regulations require a waiting period called the “right to cancel,” so lenders may not disburse the funds to DePaul for up to 10 business days after approving the loan application.
In general, the total annual loan amount that you request will be evenly split over the terms of the current academic year. However, if you are applying for a private loan to assist with a one-time educational expense, or a single term, you must indicate to the lender the correct academic terms for which you are applying for the loan. You will need to set the loan period in the loan application to match the academic period for which you want the loan.