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Private Educational Loans
Private educational loans are offered through lending institutions and are NOT part of federal government programs.
To maximize the best available funding options, we encourage you to complete the FAFSA. Federal Direct Loans tend to have lower interest rates and better financing options. Therefore, private educational loans should be taken as a last resort after Federal Loans have been considered.
As with all student loans, the amount borrowed must be for educational expenses and cannot exceed the cost of attendance for the loan period. Money is typically borrowed in the student's name, although some lenders have loans available under a parent’s name. A cosigner is usually required if the loan is borrowed in the student’s name and loan approval is based on creditworthiness. Interest rates, loan fees, and borrower benefits for private loans vary. Private loans are also available for students that may not qualify for federal aid including international students (with a cosigner), students who have past due term balances, and students enrolled for less than half-time.
- While private education loans can help you pay for college, they are most often not the best choice. You should only apply for a private loan if you have already made use of federal resources available.
You should file the FAFSA and see if you qualify for any federal grants or federal loans. Federal grants do not have to be paid back. Federal loans generally have lower interest rates than private loans, and unlike private loans, federal loan interest rates do not adjust based on PRIME* or LIBOR** rates.
If you qualify and have been offered any federal loans in your financial aid award package, you should accept them before considering a private education loan. Alternative loans are not guaranteed and are based on your creditworthiness. Most have variable interest rates and fees and do not provide the benefits of federal student loans.
If, after receiving federal and any other state or external grant/scholarship aid, you still cannot meet college expenses, then you may want to consider applying for a private education loan.
*PRIME is the Prime Lending Rate as published in the Wall Street Journal. This is the rate banks charge their most creditworthy customers. **LIBOR is the 3-month average of the London Interbank Offered Rate. LIBOR is the average interest rate paid on deposits of US dollars in the London market.
- DO NOT borrow money you do not really need. Private educational loans generally have higher interest rates than federal loans so you will often end up paying more money back on a private loan. Make sure you need the funds!
- Be selective in choosing your lender. Look for a lender that will give you the best interest rate, lowest fees, and best repayment plan. Failure to fully research these items may cause you to incur excessive debt.
- You may want to find a cosigner. Even with a good credit score, a cosigner may help you get a better interest rate and/or a better repayment plan. A cosigner is a parent, guardian, or other trusted individual that is willing to put their name on your loan and be responsible for payments should you fail to make them. There are usually cosigner release programs that allow your cosigner to be removed from the loan after a designated period of time.
When applying for a private educational loan, you will need to indicate the term you are requesting the loan for directly with the lender. Please indicate the following dates, based upon the semester(s) you are requesting the loan:Summer only: May to AugustFall only: August to DecemberFall/Spring: August to MaySpring only: January to MayPlease note that if you need a Summer/Fall/Spring loan, it is highly encouraged to request a Summer only loan in addition to a Fall/Spring loan, as our office typically processes summer aid as a stand-alone semester.
- Stony Brook University takes financial aid advising very seriously which is why we have developed a Private Educational Loan Lender List. The purpose of private educational loans is to provide secondary resources for students who have exhausted federal loan program options. A lender list is a tool used to assist students and families with the decision making process of choosing a lender. There are many student loan lenders from which you can choose. While the lenders on our sample lender list have been evaluated closely on the basis of customer service, technology, lender stability, reputation, default management, and borrower benefits, students have the right to select the lender or loan product of their choice. In fact, borrowers are strongly encouraged to conduct their own consumer research.
Stony Brook University established its Private Educational Loan Lender List by proactively requesting Requests for Information (RFI's) from lenders. The lenders on our list have demonstrated a commitment to providing high quality customer service and quick accurate loan processing. The performance of our lenders is evaluated each academic year. This evaluation is conducted by a committee of financial aid professionals and is based on a variety of criteria such as customer service and technology, lender stability and reputation, default management, and borrower benefits. The list may change from year to year as current lenders are evaluated and new lenders are considered. Each of our sample lenders must meet the following requirements:
Customer Service and Technology:
Loan borrowers should receive quick, efficient, and accurate processing of their loans through a simplified application process and state of the art operations. Programs should interface with the university’s financial aid processing system assuring a streamlined, electronic loan certification and funds delivery system. Timely and responsive processing with outstanding problem resolution service is essential. A toll free number for borrower information is required. Ideally, there should be separate dedicated toll free numbers for borrowers in school and in repayment status.
Lender Stability and Reputation:
Our sample lenders, their affiliates, and associated loan servicing agencies must be well established in the student educational loan industry. They also must maintain a proven record of excellent customer service to borrowers. This includes offering a variety of repayment options and the maintenance of a well-trained staff to answer questions via a toll-free number.
Our sample lenders provide web-based default management tools and early intervention for borrowers who are delinquent on their loan payments. They also provide information and advice to borrowers about costs of deferment/forbearance, repayment calculators, consolidation information, planning/budgeting, and credit information to students and parents.
Our sample lenders have competitive rates and provide above-average repayment benefits to loan borrowers. Borrower benefits provided by each of our sample lenders can be accessed from the websites listed on our sample Loan Lender List. Reasons for selecting a particular lender can vary from person to person. Some choose a lender based on name recognition or where they have already had positive banking experiences. Others prefer the immediate benefit of lower origination fees, resulting in more money up front. Still others prefer the long-term advantage of repayment options, like an interest rate reduction as a reward for making payments on time.
Effective February 14, 2010, lenders offering private education loans are now required to provide consumer disclosure information.
Federal regulations also now mandate that private loan lenders require borrowers to complete a Private Educational Loan Application Self-Certification Form when requesting any private education loan. This form must be submitted to the lender – NOT to Stony Brook University! While your cost of attendance and estimated financial assistance are needed to fill out section 2 of the form, you should be able to obtain this information by accessing your Stony Brook SOLAR account. If you need assistance completing this form, please contact your corresponding Financial Aid Office.
The following link explains the different between federal and private educational loans: https://studentaid.ed.gov/sa/types/loans/federal-vs-private
Students and parents can borrow from any lender. To assist you in deciding which lender to choose, we have listed some important questions to ask a lender:
- What is the interest rate and what is it based on?
- When does repayment begin?
- Can principal and interest be deferred?
- When is the interest capitalized?
- How much is the loan origination fee?
- What is the maximum amount I can borrow per year?
- What is the minimum amount I can borrow per year?
- Can payments be combined with Federal Direct payments?
- Can payments be made through electronic transfer?
- Can the loan be consolidated with other loans?
- Can I borrow money to cover past due balances from a previous school term?
- Are there interest rate deductions or other incentives for borrowers who make their payments on time?
Important information you need to know when selecting an Alternative Loan Product:
Private student loans typically have variable interest rates, with the interest rate pegged to an index, such as LIBOR or PRIME, plus a margin. The LIBOR index is the London Interbank Offered Rate and represents what it costs a lender to borrow money. The Prime Lending Rate is the interest rate lenders offer to their most creditworthy customers. A rate of LIBOR + 2.8% is roughly the same as PRIME + 0.0%.
When viewing our preferred lender list, we recommend that you use the compare feature which allows you to view multiple loans from different lenders for an easy to view, side-by-side comparison.
Additionally, we recommend that you utilize the features in the top right corner of the page. You can find the following features there:
Sort & Filter
The sort and filter feature will help you review loans that best suit your needs. Options include:
- Repayment Type
- Index Rate Type
- Enrollment Status - Indicate whether you are less than half time (6 credit) enrollment
- Satisfactory Academic Progress- Certain lenders will require to you meet Federal Satisfactory Academic Progress (FedSAP) guidelines. If you are currently not meeting FedSAP requirements, select this option so you can view lenders who may offer you a loan even though you are not meeting the federal criteria.
- Past Balance Due - Some lenders will allow you to apply for a loan to cover a past balance due. Be sure inquire with the lender directly if you have questions regarding the terms and conditions for prior balances.
Loan Estimator Tool
The loan estimator tool allows you to see what your expected monthly payments will be based upon your requested loan amount, length of the loan, and interest rate. You can elect to use the advanced estimator to include your expected graduation date, your grace period, and repayment options.