1. Private Education Loans
2018 Neophyte Training

2. Objectives To understand: Types of student loans
Differences between private and federal loans
What private loans offer and the benefits of a private loan
Application process
Role of financial aid administrators
Lender lists

3. GradPLUS PLUS Perkins Private
“Loan Soup”
Unsubsized Loans
GradPLUS
Nursing Loans
Subsidized Loans
PLUS
Perkins
There are many different types of loans that may be available to college students. It can appear to be a confusing “loan soup”; different types of student loans have different benefits and options that may be considered.
Health Professions
Loans
Private

4. Federal Aid and Private Loans to fund education
Students need to be educated about their options
Gift (“free”) aid should be used first
Loans and borrowing only what is needed for school
Too often students borrow more than needed, then don’t take advantage of their ability to return excess, or to reduce subsequent disbursements (“burning a hole in the pocket”; “mindless spending”)
Federal loans may be regarded as more advantageous
Interest rates, deferments/forbearance options, repayment options
Private loans help to fill a gap between aid and costs

5. Federal Loans vs Private Loans
All students will qualify for federal subsidized and unsubsidized direct loans, as long as they meet the federal requirements (not in default, males registered with Selective Services, citizen/eligible non-citizen, at least half-time, etc)
Borrowers must meet credit criteria, which may be different from lender to lender, in order to qualify for private loans and PLUS/GradPLUS; may require a co-signer in order to qualify, or to qualify for lower interest rate; other criteria may also apply vs

6. Using Private Loans as an Option
Private loans should be viewed as a “gap filler”
Too often students and/or families do not know, and may not understand, their options
Some families don’t want to be “bothered” with the FAFSA because they think they don’t qualify for aid
Families should review their options
Federal, State, Institutional and Private sources of aid
Some families may have other options (home equity, savings, 529s, etc)

7. Benefits of Private Loans
Help to fill the gap between other aid and cost of attendance
To pay past-due balances
If not meeting Satisfactory Academic Progress (SAP)
For less than half-time attendance
For non-degree seeking
Co-signer may be released when the borrower meets a certain number of monthly on-time payments and credit criteria, as determined by each lender

8. Other considerations
Co-signer release or loan refinancing to remove co-signer after a designated period of time
Many lenders offer loan forgiveness when a borrower dies (co-signer is released, as well); federal loans automatically forgiven
Some lenders may offer disability forgiveness for borrowers who become permanently disabled
Some lenders are offering “insurance policies” on private loans for certain situations/conditions
Lenders may offer loan modification programs in certain situations

9. Other Things to know
Private lenders may have aggregate loan limits (including both federal and private loan totals)
Different repayment options may be offered (fully-deferred, interest-only payment, full repayment)
Some lenders offer discounted interest rate when the borrower goes into immediate repayment
Some lenders offer shorter repayment periods that carry a lower interest rate
May take into account GPA to offer lower rates or discounts

10. Private Education Loan Process
Borrower applies for education loan (usually online); may need co-signer
Credit-based application (may be based all/part on applicants’ credit history, credit score, debt-to-income)
Application and Solicitation Disclosure and Self-Certification Document presented at application
Applicants provide documentation to verify information given
Usually includes identification documentation, income verification

11. Disclosures….
An example may be found at

12. Private Education Loan Process (con’t)
Approval Disclosure presented
Borrower (and co-signer, if applicable) must actively accept
School Certification sent to school for completion
Redisclosure: If any changes are made that require redisclosure, presented to borrower and co-signer, if applicable
Active acceptance required

13. Private Education Loan Process (con’t)
Final Disclosure sent
May be sent by postal mail or electronic means
Process allows for up to seven days “mail” time and 3 days, plus midnight of the third day, for the borrower and/or co-signer to rescind decision
Disbursement made to the school

14. what’s a financial aid administrator to do?
Learn and understand the policies and processes of your office
Policies may vary from school to school on processing private loans
Assist your students to review and understand their options
Encourage students to use the forms of aid that are most advantageous to them first
Educate students about options when they have “leftover money” from loans (returning funds, reducing next semester’s disbursement)
Develop resources for financial literary so students understand budgeting and responsible borrowing
In-person presentations (orientation, open house, “brown bag lunches”)
On-line training

15. To Lender List, or Not to Lender list …that is the question
Some schools choose not to have a lender list
Some schools choose to use lists to serve as a “starting point” for their students
May use a Preferred Lender List, Historical List, or other comparison vehicles
Whatever a school chooses to do, they should consider the needs of their students in making a determination that is the best fit

16. Beth McSweeney, AVP/Campus Relations Manager PNC Bank
QUESTIONS?
Beth McSweeney, AVP/Campus Relations Manager
PNC Bank