STUDENT LOANS PROVIDED BY PRIVATE LENDING INSTITUTIONS (non-federal)

Private loans are privately funded, generally provided by commercial lenders, and are not based on need, so no federal formula is used to determine eligibility. However, the amount borrowed cannot exceed the cost of education minus other financial aid. Interest rates and repayment terms vary but are generally less favorable than those provided through the William D. Ford Federal Direct Loan Program. Private loans are based on a student’s credit score, and used to supplement the federal programs when the cost of education minus federal aid still leaves unmet need.

Important things to consider when selecting the right lender and private loan for you:

• Understand the ultimate cost of the loan over its lifetime. Compare annual percentage rates (APR) vs. interest rates and fees to determine the real cost of the loan.

• Be aware of what the monthly payments will be upon graduation or leaving school and how that will affect your lifestyle after college.

• Find out what the “borrower benefits” really mean to you.  How is each benefit achieved and how are they kept throughout repayment.  What happens if you miss an “on time” payment?

• Are there forbearance or deferment options?  Understand what additional cost these may have for you.

• How does the lender capitalize interest? (i.e. once when repayment begins or quarterly)

• Notify your lender of any change in address, name or repayment problems—lack of communication is one of the first step toward delinquency.

• There are some loans that do not require certification. The University of Oregon does not participate in these programs.

• Borrowers should always explore federal loan options first as direct to consumer loans or alternative educational loans may have higher interest rates and fees.

Additional consumer information regarding private student loans can be obtained from the Project on Student Debt and from the private, commercial site FinAid.org.

The Federal Trade Commission provides a consumer guide that offers advice on how to spot deceptive marketing and tips on how to navigate the loan consolidation market.

For more information on Private Loan lenders, please contact the Office of Student Financial Aid and Scholarships.