Comparing Private Loans and Federal Loans
Private education loans may have significant disadvantages when compared with federal education loans. We strongly encourage you to first borrow any federal loans for which you are eligible. The chart below will help you in understanding the differences between Federal and Private Loan funds.
Comparison Chart of Federal and Private Education Loans
|Federal Loans||Private Loans|
|Credit Check Required?||Stafford: No PLUS/GradPLUS: Yes (limited)||Yes|
|Credit Score or Debt-to-Income considered?||Stafford: No PLUS/GradPLUS: No||Yes|
|Co-Signer Required?||Stafford: No PLUS/GradPLUS: Usually no||Usually yes|
|Deferment Options||Several options||Depends on lender|
|Grace Period||Stafford: 6 months||Depends on lender|
|Interest Rate||Fixed||Usually variable|
|Loan Fees||Stafford: up to 1.5% PLUS: up to 4%||Depends on lender|
|Flexible Repayment options||Many options available||Generally none|
|Loan Forgiveness Options||Several options available||Generally none|
|Penalties for Early Repayment||None||Depends on lender|
Choosing a Private Loan
When choosing a private education loan, you should compare the loan terms offered by several lenders in order to choose the best fit for your situation. A resource for finding active private education loan programs is ELM Select. When you choose your lender make sure that NewSchool of Architecture and Design is a participating school in their loan program.
Here are several points you should research when considering a private loan:
• What is the interest rate; is it fixed or variable; is the rate capped?
• What fees must be paid for this loan and when are they due?
• How will I receive my loan funds?
• When does repayment begin and is there a grace period?
• What will my monthly payment be?
• What will be the total cost if I use the full repayment period?
• Are there penalties for early repayment?
• Are there deferment, forbearance or cancellation options?
Most private loan programs require our office to certify your eligibility before approving your loan. If you receive financial aid, you must notify our office of any private loans you borrow as it may affect your aid eligibility.
Truth in Lending Act
Under the Federal Truth in Lending Act (TILA), your lender must provide you with the following documents:
• Self-Certification Form
This form must be completed before receiving your first disbursement of loan funds.
• Final Disclosure and Right-to-Cancel Period
After you signed your promissory note, the Final Disclosure Statement confirms the terms and conditions of your loan. At the time that this final disclosure is delivered, your “right-to-cancel” period begins. During this period of three to six days, you may cancel the loan by contacting the lender. The lender cannot release the first disbursement of your loan funds until the end of the right-to-cancel period.