Private or Alternative Education loans are available for students who have exhausted all other avenues of financial aid (i.e. Federal Stafford Loans, Federal Parent Plus Loans, outside scholarship opportunities, etc.). Private loans are credit-based and may require a co-borrower depending on the student’s credit history. Because private loans usually have higher fees, origination costs and variable interest rates, we encourage students to take a private loan only if it is absolutely necessary and only for the amount that is essential to continue their academic studies at Maryville College. Private Student loans cannot be approved for the purchase of autos, cell/smart phones, game consoles, tablets, hand-held media devices, or other items that are not related to actual Maryville College education costs.
Warning: Failure to provide information to Maryville College of a private loan may result in the reduction of existing or loss of other Financial Aid, including scholarships, if it is determined that the loan amount exceeds Cost of Attendance.
Q: Private Education Loan rates appear to be lower than Federal Loan Rates, why should I use a Federal Loan?
A: Most Private Education Loans start lending at the current Prime or Libor rate and then add extra percentage points for borrower credit worthiness. For example if you are quoted a rate of Prime plus 4%, this is not a 4% loan—it is the current prime rate (approx 7%) plus 4% which equals an 11% interest rate. This rate is not lower than the Unsubsidized Stafford rate of 6.8% or the Parent PLUS Loan rate of 7.9%. The Private Education Loan may also have higher origination fees that are usually added to the loan amount and all Private loans have a variable interest rate which could fluctuate as the Prime or Libor rate fluctuates. Federal Loans are fixed rate loans and origination fees are deducted upfront so no interest is charged on the fee. Since the Federal interest rate is fixed, your monthly payments should remain consistent over the life of the loan. This is why Maryville College always recommends that you obtain Federal Student Loans before considering the Private Education Loan.
Q: Does the borrower have to make payments on the Private Education Loan while enrolled in school?
A: While some lenders offer in-school deferments or interest only payments while the student is enrolled in school, this is becoming less common due to the current economic markets. On most private loans, the student will be expected to make interest only or principle and interest payments while enrolled in school. It is important to remember that even if the bank allows the loan to be deferred, interest will be charged on the loan during the deferred period.
Q: Is there a grace period on a Private Education loan?
A: While some lenders may offer a grace period on their Private Educational Loans after graduation or withdrawal from school, it is important to remember that interest is charged on the loan while in a grace period.
Q: How will I know if I will need a co-borrower on my Private Education Loan?
A: As part of the application process the bank will determine, based upon your credit history, if you need a co-borrower. If you have little to no credit history and are not employed at least part-time, chances are that you will need a co-borrower. The bank will also notify you, and your co-borrower, if your co-borrower does not meet their credit criteria and give you the option to try another co-borrower.
Q: Will Maryville College know the interest rate I was approved for on my Private Educational Loan?
A: No. The interest rate on your Private loan will be determined by your lender and should be disclosed to you during the application process before you sign the Promissory note. The interest rate is based upon the credit rating of you and your co-borrower. Because you are entering into a contract directly with the lender, all financial information you and co-borrower provide is confidential. The lender will only notify Maryville College of the approved loan amount if the loan is payable directly to the college.
Q: When I am approved for the loan, do I have to inform Maryville College or will the bank notify Maryville College?
A: You should notify Maryville College. It is always wise to inform the Financial Aid office ahead of time of the approved loan to see what effect it may have upon your Financial Aid package. Once a lender has approved a loan and received the signed Promissory Note from you, they will send Certification requests to Maryville College for loans that are going to be paid directly to the school. Maryville College will insure that the loan is certified for only the amount that will fit into your Financial aid package without effecting other aid.
To apply for alternative education loans using lenders that Maryville College students have used over the past three years, visit FASTChoice. The lenders listed on FASTChoice is in no way an exclusive or exhaustive list of all existing lenders. The Office of Financial Aid will honor requests to certify other alternative educational loans that do not appear on this list.
As of February 14, 2010 , both private lenders and institutions offering private loans to students must comply with a new set of regulations per the Federal Reserve Board.
Under the new laws, a lender offering private loans for postsecondary educational expenses must first provide a disclosure about loan terms and features at the time of application and must disclose information about federal student loan programs that may offer less costly alternatives. If the initial application reaches an approval status, a second loan disclosure statement must be provided to the student at that time. If a student accepts the loan terms provided in the second disclosure statement, a third final disclosure must be provided when the loan is consummated.
Each private lender may have a slightly different application process, so it is best to contact your private loan lender directly if you have any questions.
Last, a lender must provide the student with a 3 day rescission or “right-to-cancel” period after the final loan disclosure form is sent to the student. The 3 day rescission period means that once the school has certified your loan and it is ready to be disbursed, there is a mandatory 3 business day waiting period before the lender may disburse loan funds to the school. If a lender only offers a mailed Final Disclosure (not online), then they must wait 6 days to disburse the loan to the school (3 days for mail time and an additional 3 day “rescission or “right-to-cancel” period).
If you have any questions related to the new regulations, please visit our office.
NOTE: Alternative Loans will not appear on a Maryville College Student Account Billing Statement until credit has been approved and all paperwork, including the signed Loan Promissory Note, is accepted by the lender and the lender has sent notice to Maryville College they are ready to disburse funds to the college. Loans payable to the borrower will never appear on a Student Account Billing.