Private Student Loans

I’m sure you’ve heard me say this before, but I’m going to say it again!  Private student loans should ONLY be considered as a LAST RESORT after all scholarships, grants, and federal student loans have been considered.


Private student loans are awarded based on credit score and income.  They can only be used for education related expenses (i.e. tuition, text books, transportation, and student housing).  These loans usually require students to have a co-signer, since it is rare for high school students to have extensive credit history. The co-signer is typically one of the student’s parents.

In this post, I’ll discuss the specific eligibility requirements for obtaining a private student loan, potential benefits, re-payment options, and explain how the funds get disbursed to the school.

How Can I Become Eligible for Private Loans?

  1. Be enrolled in school at-least half time
  2. Be a U.S. Citizen or permanent resident (or your co-signer must be)
  3. Have at least 27 months of good credit history
  4. Have proof of enrollment in school – tuition bill, recent transcript, class schedule, etc.

What Are Some Potential Benefits of Private Loans?

  1. They are NOT awarded based on need
  2. You can apply at any time
  3. You can borrow up to the full cost of attendance
  4. You don’t have to make payments while you are in school (as long as you are enrolled part-time)
  5. Some interest on private loans may be tax deductible
  6. You may get a lower interest rate if you set-up automatic payments once you’ve graduated

What Are My Repayment Options?

After Graduation – The first option is to pay the loan back after graduation.  If you choose to pay the loan back after graduation, keep in mind that interest will continue to accrue (or accumulate) while you’re enrolled in school and will be added to your total loan balance after graduation.  Payments will begin 6 months after graduation or when you are no longer enrolled at least half time.

Pay Interest During College – The second option is to pay the accrued interest while you’re enrolled in school.  If you choose to go this route, then your payments will begin either 45 days after graduation or if you withdraw from school.

Pay It All Now – The third and last option is to immediately pay the funds back after they have been dispersed to the school.  Payments of principal and interest will begin 45 days after the loan is dispersed.

How Long Does The Process Take?

After all the documentation is received and paperwork completed, then it takes about 14 business days to receive a disbursement check.

Where Is The Money Sent?

Typically, the lender will send the money directly to the student.  However, some lenders will send the check directly to the school.  If there is any money left over, then the school will send a refund check directly to the student.

Where Can I Get Started?

For additional information on this topic, visit

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Lauren Anderson is a certified school counselor who's passionate about helping students all over the world successfully transition from high school to college! After spending 6 years as a business professional, she obtained her Master’s degree in School Counseling and now spends her spare time helping students.

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