Types of private student loans
There are private student loans for students in undergraduate, graduate, certificate, dental, medical, and health profession programs. Sallie Mae also offers private student loans for graduates studying for the bar exam, or relocating for medical and dental residencies. Parent loans, taken out by a parent, relative, or another creditworthy individual (not the student) are another way to help you pay for college.
Private student loans are typically issued by a bank or financial institution, (as opposed to federal student loans, which are offered by the government).
What private loans for college can be used for
Whether you're studying online or on campus, private school loans—as well as federal student loans—for college and grad school can be used to pay for your education expenses, which for full-time and half-time students may include:
- Tuition
- Room and board
- Fees
- Books
- Supplies
- Transportation
- Computer for school
Borrow what you need for the entire school year. Apply only once with a single credit check and funds will be sent directly to your college or university each term as requested. You can cancel future disbursements as needed with no penalty. No additional interest is charged until money is sent to your school.
Private student loan eligibility
Federal and private student loans use different eligibility criteria.
Federal student loans, offered by the government, are based on your financial and family situation, as provided in your FAFSA.
- For Subsidized Loans, the US Department of Education pays the interest while the student is in school at least half time, grace (if offered) and authorized deferment periods.
- For Unsubsidized Loans, the borrower is responsible for paying interest during the in-school or grace periods, or a post-school deferment.
Private student loans, offered by banks and financial institutions, are based on your credit profile. Your credit—and your cosigner’s credit—are evaluated, along with other information provided on your application. Applying for a private student loan with a creditworthy cosigner may increase your chances for approval and may help get you a better rate, since many students haven’t had time to build up their own credit.
You should generally consider federal student loans first, and then take out a private student loan if you still need money for college.
Applying for private student loans
You can apply for private college loans directly from each lender’s website. You should apply after you’ve made your school decision and once you know how much you need to borrow, so you won’t have to submit separate student loan applications for schools you’re considering.
How to get a private student loan
There’s no cost to apply for private student loans, but there are a few things you should know before you start:
- You’ll fill out basic personal information and financial information.
- You’ll be asked to choose the interest rate type and repayment option for your loan.
- You generally can apply with a creditworthy cosigner during the application process. If you apply with a cosigner, they’ll have to supply their financial information in the student loan application.
Our private student loan application process only takes about 15 minutes to receive a credit result.
Understand the student loan application process
How much you should borrow in private student loans
In terms of how much you should take out for college, borrow only what you think you can afford to pay back later. Think about your future career and how much you may make in your chosen field. To help estimate your future income potential, you can visit the US Department of Labor at bls.gov.
The amount of money you can receive from a private education loan varies by lender. If your lender requires “school certification,” your school verifies your enrollment and ensures that you’re not borrowing more than the cost of attendance (including your federal student loans, scholarships, and grants).
Do you need a good credit history for private student loans
Private student loans are credit-based. That means that a lender will look at your history of borrowing money and paying it back. Federal student loans, on the other hand, are generally based on financial situation and federal guidelines rather than credit. (Note: A credit check is conducted for the Federal PLUS Loan.)
If you don’t have a credit history, you’ll need a cosigner. A cosigner can be a parent, relative, or any other creditworthy individual. Their good credit history may help you get a loan.
Along with you, a cosigner accepts responsibility for repaying your private student loan. If you keep your loan in good standing, making on-time payments, it can be a great way to build your own credit. If you fall behind or don’t pay back your loan, your cosigner’s credit can suffer if they don’t make payments.
What happens after applying for a private student loan
After you apply for our private education loans for college or grad school, you’ll typically get a credit approval within 15 minutes of applying. You’ll also get notices to review, accept, and e-sign your loan terms.
Your school will have to certify your loan amount before it can be disbursed (paid to the school). Then you’ll get a Final Disclosure spelling out the details.
You have the right to cancel your private student loan as described in the Final Disclosure before it’s disbursed (sent) to your school.
Learn what happens after your loan is approved