Private loans, also called alternative loans, are credit-based loans offered by lenders and other financial institutions. Eligibility for most of these loan programs is based on the creditworthiness of the borrower and the borrower may require the assistance of a parent or another credit-worthy co-signer. Private loan programs are alternate options that can assist with bridging the gap between the cost of attendance and the financial aid awarded.
How To Apply
Students are required to select the lender of their choice for a private loan. While Loyola University Chicago does not recommend a specific lender(s), we do advise that borrowers consider the following when applying for a private loan:
- Conduct your search online and choose lenders or financial institutions that are credible
- Thoroughly research all terms and features of the loan (interest rates and how they are determined, applicable fees, grace periods, lengths of repayment terms, co-signer release availability, borrower benefits or incentives)
- Determine if you will be required to make payment(s) on the loan while you are enrolled in school
- Try to only borrow the amount absolutely necessary to cover your unmet costs to reduce loan indebtedness
- Inquire if there is an aggregate maximum, or a limit to how much you can borrow over a lifetime, with the lender
- We generally recommend using private loans as a last resort. The Federal Direct Stafford Loans, Federal PLUS Loan (parents of undergraduate students), or Federal Graduate PLUS Loans (graduate students) are usually better options for financing your educational costs.
Once you have chosen your lender, you will begin the loan application process directly with the lender on the lender’s website or via a paper loan application. The lender will communicate directly with you regarding the approval of your loan application and any additional items needed. Loyola University Chicago will act as intermediary to confirm your enrollment at the University and to apply the loan funds received from the lender to your student university account.
The key terms defined below are ones that you may encounter during the alternative loan application process:
This refers to the period during which you wish to receive your loan. We recommend that you apply for an alternative loan for the entire academic year for which the loan period would be from August to May of that year (i.e., 08/01/2011 to 05/30/2012).
The Financial Aid Office at Loyola University Chicago will receive a request from the lender to confirm the student’s enrollment at the University. It may take up to 7-10 business days from the day we receive the request for our office to certify your alternative loan. Email notifications will be sent to the student’s Loyola email address once the loan certification request has been received, as well as when the certification has been completed and when the loan has been added to the student’s financial aid award.
Loan Disbursement Date
The disbursement date for a loan is scheduled by the lender once the loan has been certified by the Financial Aid Office. For undergraduate students, private loan funds (and all financial aid awards) will not pay towards the student’s university account balance until after the first two weeks of the semester (fall and spring).
Under the Higher Education Opportunity Act, the private loan application process has changed to include new requirements for borrowers. The changes, effective February 14, 2010, require student borrowers to submit three loan disclosures provided to them by their lender during the application process: Application Disclosure, Approval Disclosure, and the Final Disclosure.
Once a student has completed and submitted these disclosures to the lender, Loyola will confirm the student’s enrollment to the lender. Students are also required to complete a Self-Certification Form before any loan funds are disbursed.
The purpose of these disclosures is to:
- Present the terms and costs of the loan in a clear and consistent manner
- Allow for comparison shopping and re-evaluation of borrowing a private loan during the application process
- Present lower cost federal options that should be exhausted prior to considering a private loan
- Reduce overall borrower indebtedness
Loan Process Timeline
The overall process of applying for a private loan to the time the funds are paid to your University account can take an estimate of 2-3 weeks. The timeline below outlines all the steps that need to occur before the funds are made available.
Step 1: Student completes their section of the online application and accepts the Application Disclosure
Step 2: Co-signer completes their section of the application and accepts the Application Disclosure
Step 3: Loan is credit approved
Step 4: Student accepts and e-signs Approval Disclosure, and downloads Self-Certification Form
Step 5: Co-signer accepts and e-signs Approval Disclosure
Step 6: Lender requests school certification
Step 7: Student completes and submits Self-Certification Form to the lender
Step 8: School completes certification and sends to the lender
Step 9: Final Disclosure is sent to the student
Step 10: Loan application undergoes a federally-mandated, 6-10 business day rescission period. The loan disbursement cannot be made until this period has ended, allowing the borrower time after certification to request the cancellation of the loan
Step 11: Disbursement of funds from the lender to the university
Step 12: Loan funds are paid to University account balance, and a refund may be issued if there are funds in excess of the amount owed