Private Education Loans

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 by a lender, such as a bank, credit union, or state agency, and have terms and conditions set by the lender. 

We strongly suggest that students and their families exhaust their federal student loan options, including Federal Parent PLUS Loans, before borrowing a private loan. The federal government makes federal student loans with terms and conditions set by law. Federal loans have fixed interest rates, future payment postponement possibilities, loan forgiveness options, various repayment plans, and loan consolidation. For more information on federal loans versus private loans, please visit studentaid.gov. 

Private loans often have stricter eligibility requirements and can differ by lender and loan type. Lenders usually require a good credit score and may require a co-signer. 

Like federal student loans, private loans must be paid back. Repayment is made directly to the lender. Each lender offers their own repayment options. 

Students and families must research their options before choosing a lender that best fits their needs. Before borrowing, be sure to understand fully: 

  • The terms of the loan.
  • What is the interest rate, and how will it be calculated?
  • Are there any fees associated with the loan?
  • What are the terms of repayment?
  • What are the lender's requirements for borrowing?
    • 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? 

The Private Loan Process at Salem State

The Financial Aid Office will not certify a student's private loan until they have completed all requirements with their lender. Student must verify with their lender that all required documents and disclosures have been received. Students must ensure that their personal information at Salem State matches the information they provide to the lender. For example, they must ensure that the Social Security Number and name on file with Salem State are the same as those on file with their lender.

After receiving a private loan certification request will be processed in approximately seven to ten business days before it appears on a student's account. Processing times can be extended based on the time of year, such as the beginning of each major semester.

Students must reply quickly if they receive messages from their lender or Salem State, as additional information may be needed to process their loans.

A private loan cannot be certified above the student's cost of attendance (COA). Therefore, our office may reduce the loan amount requested with the lender if a student receives other financial aid or the requested loan amount exceeds the COA.

Estimated COA - Other Financial Aid Received = Amount of Private Loan. 

  • For example, suppose the estimated cost of attendance is $22,000, and the student will receive $10,000 in other financial aid (including Federal Direct Loans, grants, or scholarships). In that case, a student may borrow up to $12,000 for the academic year.

How To Apply For a Private Loan

Students apply directly through the lender and can choose any lender they wish. To find a private loan, students may use ELM Select*. ELM Select is an excellent tool for determining which lender and loan product is right for them. If a student has questions about a lender or a loan type, it is best to contact the lender for specific information. 

Students can compare lenders side-by-side to see which lender is best for them. ELM Select allows students 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

Use the Loan Estimator for a sample monthly payment and total cost of a student's private loan. Estimates are calculated based on the information a student provides. The actual total loan cost, monthly payment, and annual percentage rates will vary.

*This list shows lenders who have provided private loans to students from Salem State. Please be advised that Salem State University does not recommend or promote any lender. It is up to the student to decide which lender they would like to borrow from for their private loan.

Certifiable Loan Terms

A private loan can only be certified and disbursed under the below terms. The certifiable loan terms are:

  • Two Term Loans
    • Fall/Spring (within the same academic year)
    • If a loan is certified for both the Fall and Spring terms, the first half of the funds will disburse in the Fall term and the second half in the Spring term.
  • One Term Loans
    • Fall only
    • Spring only
    • Summer only
      • The Summer term is separate from the Fall/Spring term. Students must apply for a separate private loan for the Summer term.
    • If a loan is certified for a single term, it will be disbursed in one installment during the certified term.

Past Due Balance Certification

If a student has a past-due balance from a previous term or aid year, they must borrow a separate private loan for that specific term or aid year to pay it. The loan will only be certified for the amount owed for the term or aid year in which the balance is due, and it can only be certified up to the remaining cost of attendance 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 their balance from Summer. 

Please note that each lender has specific guidelines regarding past-due balance loan certification, and some do not allow past-due balance certification. 

Disbursement and Refunds

Lenders will disburse funds to Salem State approximately eight to ten business days after the borrower receives the Loan Consummation Disclosure Statement, which is called the right-to-cancel period. Federal regulations prohibit lenders and schools from disbursing funds until the right-to-cancel period has passed.

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 has been paid, a refund will be generated. The Student Accounts Office is responsible for applying funds to a student's account and issuing student refunds. For more information on refunds, please visit the Student Accounts FAQ's.

Tips For Borrowing

Be sure to exhaust all other sources of financial aid first, including federal student loans. Research all possibilities for scholarships, grants, and work-study.

Creating a budget and learning budgeting tips can help reduce expenses. Budgeting can also help manage finances while attending college.  

Before accepting any loans, we strongly advise students to review their current account activity, all charges on their account, anticipated refunds, and financial situation. Borrow only what you truly need; estimate how much you will need to borrow for the entire school year. For information on tuition and fees, billing, and payment options, please visit the following:

Borrowing Terminology

  • 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.
  • Co-signer: A person who agrees to repay a loan with the primary borrower. This is usually a person the borrower knows well who agrees to take equal responsibility for the loan.
  • Degree Seeking Requirements: A list of conditions necessary to receive a student loan. This may include a minimum number of hours taken and the mandatory number of days in attendance.
  • Enrollment Requirements: A list of conditions necessary to receive a student loan. This may include a minimum number of hours taken and the mandatory number of days in attendance.
  • Fixed Interest Rate: Interest accrues at the same rate throughout the life of the loan. Once a borrower begins to pay principal and interest, the monthly payments will not change.
  • Lender Name: The name of 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 includes the terms and conditions of the loan, including the interest rate, fees, repayment schedule, and total loan amount. It explains the terms to the borrower before officially agreeing to take the loan and “consummate” the agreement.
  • Servicer Name: The name of the organization that collects payments, provides customer service, and performs other administrative responsibilities on a private student loan.
  • Variable Interest Rate: The interest rate is tied to current market interest rates and can increase or decrease over the life of the loan. This will impact monthly payment amounts, which may be higher in some months than in previous months.
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