<p>When applying for a private loan, do you have to choose the exact amount for each year of college, or can you just say 'enough to cover cost of attendence'?</p>
<p>Bump (10 char)</p>
<p>Usually, the private loans are certified through the school’s financial aid office. You can borrow the Cost of Attendance - all other aid (grants/scholarships/loans/work study). You can request what you want to borrow, but if you are not eligible for that much, the school will just certify it for the amount you are eligible to borrow.</p>
<p>So you can borrow to cover the EFC?</p>
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What do colleges look at to decide if you are eligible for private private loans? Surely not the EFC… I thought you could use private loans to pay the EFC?</p>
<p>You can use private loans to cover the EFC. But you can’t borrow in excess of the COA, And you can’t borrow the part of the COA that has already been covered by financial aid. </p>
<p>So, as Kelsmom said, - you can borrow the COA less any other aid awarded (grants/scholarships/loans/work study)</p>
<p>Yes, you can borrow to cover the EFC - just as you can use unsubsidized Stafford loans to cover the EFC (although you are bound by the limits depending on your year in school for Stafford loans).</p>
<p>Colleges only certify your loans - that is, the financial aid office lets the lender know how much you are eligible to borrow. There is NO guarantee that you will get a private loan! This is very important to understand. Stafford loans are guaranteed - private loans are not. You must apply through a lender & you may or may not get approved for the loan. In this economic climate, lenders are being more careful about who they choose to lend money to. Also, you must be very careful to read and understand all terms of private loans. I young woman I worked with recently was told by her lender that her loan was “subsidized” — the student took that to mean that the interest did not accumulate while she was still in school. When I told her that I was certain her private loan was not subsidized, she talked to the lender. Again, the lender told her it was subsidized. When the student pressed them for an explanation, she found out that the interest was not subsidized - she could put off repaying interest until the loan went into repayment, but it would still be accumulating & she would be paying interest on interest. She was shocked, because she had not understood what she was getting into.</p>
<p>Also, a word of caution. I have heard rumblings that some larger lenders may no longer allow the interest payments to be deferred on private loans - they will be requiring borrowers to make interest payments while still in school. You must make sure that you know exactly what is required of you when you borrow through a private lender.</p>
<p>When possible, I recommend a parent PLUS loan over an alternative (private) student loan. Of course, Stafford (and Perkins, if offered) loans are the best bets - but again, the amounts are capped depending on year in school.</p>
<p>Bottom line: don’t get yourself in over your head. There are affordable options for school.</p>
<p>Thanks for the info; also, what determines whether a parent is eligible for a PLUS loan? credit score?</p>
<p>Yes, there is a credit check. I work at an urban university with many very low income students. Plenty of our parents were not approved for PLUS loans this year. We can award an extra $4000 unsub Stafford if the PLUS isn’t approved ($5000 for jr/sr).</p>
<p>Is all of this financial stuff done before May 1, when you have to decide which college to go to? What if you accept a college’s offer for admission, and then find out you’re not approved for a private loan?</p>
<p>Parent Plus loans have more loose credit criteria than most lenders.</p>
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<p>Bump (10 char)</p>
<p>You can always complete the private loan application early but most approvals are only valid for 60 days.</p>
<p>How long does it take for a private loan to get approved/denied?</p>
<p>Just a couple days for a Direct loan. NiikkiiL might know how long it takes for a FFELP loan. Schools use one or the other loan program.</p>
<p>Depending on your credit history, FFELP lenders can approve/deny a private loan within minutes if the application is submitted online or via the telephone.</p>