Private Education Loans
Private educational loans can replace or help supplement borrowing from other programs.
For example, even though students can borrow up to their entire COA through a combination of Stafford and Grad PLUS Loans (both federal), some may choose to apply for a private loan after they max out their eligibility in the Stafford Loan program. This is completely your decision, but you need to know the differences between federal and private loans—and in this case, specifically the differences between Grad PLUS and private loans—before you make that decision. Refer to the chart comparing federal and private loans (PDF download) for more information.
The recent turmoil in credit markets has caused a number of private education loan lenders to either stop making private education loans or cut back on their availability by increasing the credit criteria needed to meet their eligibility requirements. This also applies to private consolidation loans. Graduate business students generally represent an attractive risk group to most lenders of private loans, but, if you have adverse credit, you may find it difficult to qualify for a private loan—if you do qualify, you may find it costs more. You may also be required to apply with a cosigner.
Students from outside of the US interested in studying in the United States may find that their only chance of qualifying for a private education loan will be with a cosigner who is a US Citizen or Permanent Resident.
Most private loan programs also offer extended repayment terms, but those are likely to vary by program and lender. They are not as exhaustive as those offered through federal programs like Stafford and Grad PLUS. Just like Stafford and Grad PLUS Loans, you get to choose which lender you want for your private loans.
Once you select a lender, complete their application (which may be available online) and send it to the Financial Aid Office for certification, if required.
There are a couple of other points to consider regarding private educational loans:
- Annual maximums for private loans usually vary by lender.
- Though not necessarily the case for graduate business students, private loans are generally considered harder to get than federal loans.
- You do not need to complete the FAFSA to get a private loan.
- Private loans usually have variable interest rates.
- Private loans may be more expensive (at least over a lengthy repayment period) than federal loans; they may also be less expensive depending on what assumptions you use in comparing them.
- Private loans may not have as much flexibility in terms of grace, deferment, and forbearance options as federal loans
- Depending on your credit, a cosigner may be required
