Student Loan FAQs

Type of Loan

Private Student Loans

What is a private education loan?
A private education loan is a non-governmental loan made from a bank to an individual expressly for the purposes of paying for college expenses such as tuition, room and board and other associated costs. Traditionally, private loans are used to cover unmet need or the "gap" (costs not covered by scholarships or other loans offered by your school).

How do I know if I need a private loan?
Private loans are an excellent, affordable way of paying for education costs that are not covered by other aid received from your financial aid office. Many students and families use private loans to supplement other aid and to cover costs associated with the estimated family contribution, or EFC. In some cases, you can also use private loans to cover any outstanding balances owed to your school.

How does the private loan application process work?
After selecting the lender of your choice at SimpleTuition, you can either call the lender via the toll free number listed or click through to the lender’s site to begin an application. The approval and processing of applications varies greatly from lender to lender so it is hard to put a time-line to it, however, some lenders offer e-signature, which will allow you to complete the process online and receive your funds faster. Some banks will send or express mail the necessary documents to you to complete the loan. As with federal student loans, you will be required to sign (or e-sign) a promissory note whereby you agree to accept the terms of the loan (rate/fee/APR/repayment) and then repay it.

Why should I use a co-signer for a private loan?

To increase your chances of approval and possibly improve the rate you receive, you are strongly recommended to apply with a credit-worthy co-signer. Some lenders require you to apply with a co-signer regardless of your income or credit rating. You'll need to look at each loan program for these requirements

Applying with a co-signer may also help you receive a lower interest rate and better terms on your loan offer.

Most lenders will require a borrower to have a strong credit score (good-excellent) in addition to other criteria such as no negative credit history (missed payments), debt-to-income ratio (amount of debt vs. your current income) and even proof of current employment and income.

So, if you are a student without sufficient personal income or credit history you'll almost certainly need to apply with a credit-worthy co-signer.

Is there a credit check for private loans?
Yes. Private loans are personal loans issued to individual borrowers by lending institutions. Much like a mortgage or an auto loan, your credit will determine if you are approved and also what rate (and possibly fees) you may receive. These loans are not guaranteed by the federal government and therefore are treated like any other consumer loan but with a special purpose. Additionally, most lenders will require the presence of a credit-worthy co-signer or co-borrower whose credit will also be checked.

Will applying for a loan hurt my credit score?
Each time you apply for a loan, whether it is a student loan, a car loan, a mortgage or other, the lender may request your credit report from one or all three credit reporting agencies. Each time an inquiry is made, it is noted on your report. Too many inquiries may have a negative impact on your credit score. However, most recently developed credit scores recognize when a consumer is shopping for the best rates and either ignore multiple inquiries or count them as only one inquiry if they occur within a specific period of time. In such cases, shopping around will have little or no impact on a credit score.

Do I have to file the FAFSA before I apply for a private education loan?
No, you are not required to file a FAFSA before applying for a private loan. This may make it more convenient to finance a large portion of your tuition bills, however, if you have filed, you may want to exhaust other forms of aid (such as federally guaranteed Stafford loans) before taking out a private loan.

What information do I need to apply for a loan?
In order to complete an application for a private student loan with most lenders, you will need the following information:

• Your full name, social security number and date of birth
• Your permanent address and the number of years you have lived there (no P.O. boxes)
• The amount of your monthly rent or house payment
• Your home phone number
• Your current occupation and position
• The name of your employer and how long you have been employed by them
• The business phone number of your employer
• Your gross annual income
• The contact information for a reference (name, address, home/business phone number)
• The name of your school (or the school the student for whom the loan is for is attending)
• The social security number, contact and employment information for your co-signer (if applicable)

Applying for federal student loans may require somewhat less information, but does require completion of the FAFSA.

Would the money from the loan be sent to the school or to me?
When you apply for a private student loan, look for whether the loan is certified or uncertified. A certified loan requires verification by your school that you are not borrowing more than the total cost of education, less other aid received. Loan funds for certified loans are generally sent directly to the school. An uncertified loan does not require your school to certify any aspect of the amount borrowed (but will require verification of your enrollment at that school). The loan funds are usually sent directly to you. Make sure to speak with the financial aid office at your school for the school’s refund policy, including how and when the refund would be sent to you.

I don't have a co-signer. What do I do?
Obtaining a private student loan without a credit-worthy co-signer or your own positive credit history is very difficult. The following information about co-signers might help: Tips on Co-Signing a Private Student Loan

Our advice would be to try one of the following:

• Talk to the financial aid office at your school, which could help you find options for financing your education.
• Ensure that you have already maxed out all of your federal financial aid options - including loans that do NOT require a co-signer, such as Stafford Loans. This means you need to fill out the Free Application for Federal Student Aid at http://www.studentaid.ed.gov.
• Consider investigating alternative sources of funding for your education, such as scholarship programs, work-study, and more.
• Lastly, you may want to consider reducing the costs of your education. Is it possible to take classes part-time so you can work more? Consider transferring to a lower-cost school, or to a school able to award more financial aid. Again, your school's financial aid office may be able to help here with a work-study job or other grant opportunities.