Private Education Loans
Private education loans are another option to help students pay for costs not covered by other aid they've received. These are nonfederal loans made by lenders, such as banks, credit unions, or state agencies, with terms and conditions set by the lender.
Private loans often have stricter eligibility requirements and can differ by lender and loan type. Lenders often require a good credit score and may require a cosigner.
Like federal student loans, private loans must be paid back. Repayment is made directly to the lender. Each lender offers their own repayment options.
A private loan cannot be certified in an amount exceeding the student's cost of attendance (COA). Therefore, our office may reduce the requested loan amount with the lender if a student receives other financial aid or if the requested loan amount exceeds the COA.
Estimated COA - Other Financial Aid Received = Amount of Private Loan.
- For example, the estimated cost of attendance is $22,000, and the student received $10,000 in financial aid. In that case, the student may borrow up to $12,000 for the academic year.
We strongly recommend that students and their families exhaust federal student loan options, including Federal Parent PLUS Loans, before taking out a private loan. Federal student loans are made by the federal government and are governed by law. Federal loans offer fixed interest rates, deferment options, possible loan forgiveness, multiple repayment plans, and loan consolidation. For more information on federal versus private loans, please visit studentaid.gov.
Students and their families must research their options before selecting a lender that best fits their needs.
Before borrowing, be sure to fully understand:
- The terms of the loan.
- What is the interest rate, and how will it be calculated?
- Any fees associated with the loan.
- The terms of repayment.
- The lender's requirements for borrowing money.
- Does the lender require students to be meeting satisfactory academic progress?
- Does the lender require students to be enrolled at least half-time?
- Does the lender require students to be enrolled in a degree-seeking program?
- What is the minimum amount required to borrow funds?
Private Loan Process at Salem State
Students must apply directly to the lender of their choice. To find a private loan, students can use ELM Select*. ELM Select lets users compare lenders side by side to find the best option and apply directly with a lender.
If you have any questions, please contact the lender for specific details.
ELM Select allows users to sort and filter by:
- Alphabetically by lender
- Annual Percentage Rates (APR)
- Repayment Type
- Fixed and Variable Index (Interest) Rate Type
- Enrollment Status
- Satisfactory Academic Progress Requirements; and
- Past Due Balances Applied
Prospective borrowers can use the Loan Estimator to estimate their monthly payment and total cost for a private loan. Keep in mind that the actual total loan cost, monthly payment, and annual percentage rates may vary based on the information a student provides.
Lenders send the certification request information to Salem State. The Financial Aid Office will not certify a student's private loan until it receives the lender’s request.
After the certification request is received, it will be processed in approximately 7 to 10 business days. Processing times may vary throughout the year. At the beginning of each major semester, processing times may be longer than they are later in the term.
Students must confirm with their lender that they have received all required documents and disclosures. They should respond promptly to messages from their lender or Salem State, as additional information may be needed to process their loans. Students should also ensure that the personal information on file with Salem State matches the details they provide to their lender.
- For example, ensure that the Social Security number and name on file with Salem State match those on file with their lender.
Lenders are required to provide borrowers with a minimum 3-day rescission or “Right-to-Cancel” period after the final loan disclosure, the Loan Consummation Disclosure Statement, is sent to the borrower. Federal regulations prevent lenders and schools from disbursing funds until the right-to-cancel period has concluded.
The Right-to-Cancel period means that after Salem State has certified your loan and all disclosures are sent, there is a mandatory minimum of 3 business days before the lender can disburse loan funds to the school.
*This list displays lenders who have provided private loans to Salem State students. Salem State University does not endorse or recommend any lender. It is the student's choice which lender they want to borrow from for their private loan.
Private loans can be certified as either a two-term or a one-term loan. The loan will be certified and disbursed in accordance with the certifiable loan terms listed below.
Two-Term Loan
- A loan certified for the Fall and Spring terms will be disbursed in two halves: the first half of the funds will be disbursed in the Fall term, and the second half in the Spring term.
One Term Loan
- A loan certified for a single term will be disbursed as a single disbursement in the requested term.
Certifiable Loan Terms
- Fall/Spring (within the same academic year)
- Fall only
- Spring only
- Summer only
- The Summer term is separate from the Fall and Spring terms. If a student needs a private loan for the Summer term, they must apply for a separate loan.
Students with a past-due balance from a previous term or aid year must apply for a separate loan for that term or aid year.
- For example, if a student has a past-due balance from the Summer term and is trying to return for the upcoming Fall term, they will need to apply for a Summer term loan to cover that balance.
The loan will be certified only for the amount owed for the term or aid year in which the balance is due, up to the remaining cost of attendance for that term or aid year, or the amount requested, whichever is lower.
Each lender has specific guidelines for past-due-balance loans, and some do not allow them. Contact the lender directly with any questions.
Private loans are disbursed to a student’s account in approximately 5 to 7 business days after Salem State receives the funds from the lender.
When financial aid funds, including private loans, are disbursed, any outstanding balances owed to the university are paid first. If any excess funds remain after the balance is paid, a refund will be issued.
The Student Accounts Office applies funds to students' accounts and processes refunds. For information about refunds, please visit the Student Accounts FAQ page.
- Annual Percentage Rate (APR)
- The APR reflects the total cost of borrowing money over the life of the loan. It considers the interest rate, loan fees, and the repayment length.
- Cosigner
- A person who agrees to repay a loan along with the primary borrower, usually a parent. A cosigner with a strong credit record can increase the likelihood of loan approval and/or secure better loan terms. The cosigner is legally responsible for repaying the loan if the borrower defaults. The cosigner may also be negatively affected by late loan payments. Additionally, some loans may automatically default or require full repayment if the cosigner passes away.
Eligibility Requirements
A list of conditions necessary to receive a student loan. Requirements may include enrollment in a degree-seeking program, a minimum number of credit hours enrolled per term, meeting satisfactory academic progress, U.S. citizenship or permanent resident status, and compliance with a minimum debt-to-income ratio. The debt-to-income ratio measures the percentage of a borrower's gross monthly income (before taxes) allocated to existing debt payments. It is used to predict their ability to repay the loan.
Interest Rate
The amount a lender charges a borrower, expressed as a percentage of the principal.
Interest Accrual
The amount of interest that accrues (adds up) on loans over time, determined by an interest formula.
Interest Method
Simple interest is calculated only on the principal amount, whereas compound interest is calculated on the principal plus previously accumulated interest. Calculation can be daily, weekly, monthly, etc.
Fixed Interest Rate
Interest accrues at the same rate throughout the life of the loan. Once a borrower begins making principal and interest payments, the monthly payments will not change.
Variable Interest Rate
The interest rate is tied to current market rates and can fluctuate over the life of the loan. A variable interest rate will affect monthly payment amounts, which may be higher than in previous months.
Capitalization
Any unpaid interest added to the principal often accrues during times when payments are postponed (e.g., grace periods, forbearances, or deferments).
Lender
The financial institution, bank, or credit union from which a borrower may obtain a private student loan.
Loan Consummation Disclosure Statement
A document provided by the lender that outlines the loan's terms and conditions, including the interest rate, fees, repayment schedule, and total loan amount. It explains the terms to the borrower before the borrower officially agrees to take the loan and “consummate” the agreement.
Principal
The actual amount borrowed.
Servicer Name
The name of the organization that collects payments, provides customer service, and performs other administrative responsibilities for private student loans.
Below is a list of questions borrowers can ask a lender when researching which lender and loan is best for them.
Eligibility Criteria Questions
- What is the minimum credit score required to obtain the loan?
- Is there a debt-to-income (or debt-to-anticipated future income) ratio?
- Will borrowing a loan this year impact my ability to borrow in future years/will I have access to this loan for the duration of my program of study?
- Do I need a cosigner/will a cosigner help me get better loan terms?
- Is there an automatic default or acceleration if my cosigner dies?
- Is there an annual, aggregate, or lifetime borrowing cap?
Interest Rate and Fee Questions
- What is the interest rate? What is the APR?
- Is the interest rate fixed or variable?
- If variable, how often does, or can, the rate change?
- Is there a cap on how high my interest rate can go?
- When does interest begin to accrue?
- How does interest accrue? (e.g., simple, daily, compound)?
- When does interest capitalize?
- Are there any fees associated with the loan/are they added to the loan principal balance or subtracted from the loan amount disbursed to the school?
Repayment and Servicing Questions
- When does repayment begin?
- Can I make optional payments during school?
- What is the repayment term (length)?
- Are there different repayment plan options?
- Can I change repayment plans if my circumstances change?
- Do you offer a calculator to estimate my monthly repayment amount?
- Is there a prepayment penalty?
- Is there a cosigner release option?
- Who will my monthly payments go to (servicer)?
- At what point do you report delinquencies to credit bureaus?
- What is considered a default?
Borrower Protection Questions
- Under what conditions can my loan be discharged?
- What happens if I have difficulty repaying my student loans/Are there opportunities for temporarily reduced payments, deferment, or forbearance?
- Do you offer any refinancing options?
- What happens to my loans if I decide to pursue further education in the future?
Before applying for a private loan, be sure to exhaust all other sources of financial aid, including scholarships, grants, work-study, and federal student loans.
We strongly advise students to review their current account activity, all charges on their account, anticipated refunds, and their financial situation before applying for a private loan.
Borrow only what you truly need; estimate how much you will need to borrow for the entire school year.
Creating a budget and learning budgeting tips can help reduce expenses. Budgeting can also help manage finances while attending college.
Students may assign their parents or a guardian as an Authorized User on their TouchNet billing account. An Authorized User can view account activity, the current bill, and anticipated aid.
For information on tuition and fees, billing, and payment options, please visit the following: