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Private or Alternative Loans
Private Loans (also referred to as Alternative Loans) are used to help bridge the gap between the cost of your education and the amount available from federal and state grants and loans. Private Loans typically carry higher interest rates and fees than federal loans. The loan programs differ, so it is important that you know the terms and conditions of the loan, as well as, your rights and responsibilities as a borrower. It is recommended that students borrow wisely. Before you look at private loans, please make sure that you have exhausted all possible federal and state financial aid funds available. Our office strongly recommends that students file the Free Application for Federal Student Aid (FAFSA) before applying for private loans.
Private loans for the next academic year will not be processed prior to July. Most lenders require a credit check which is only valid for 90 days. Please keep this in mind when applying for private loans.
*Processing time can take up to one month depending on current volume.
Steps to apply for a private Loan
- You will need to choose a lender and apply for the loan directly using the lender's online application on their website. You may conduct your own research and apply using any lender you wish. Our office will certify Private Loans from any lender.
- You may need to apply for a Private Loan with a co-signer. A co-signer is someone who signs your promissory note along with you. By co-signing your promissory note, this person assumes responsibility for the loan if you fail to repay it. If you have limited or damaged credit history, applying with a co-signer can increase your chances of receiving a private loan with the most attractive terms. If you are not a U.S. citizen or permanent resident alien, you may be required to apply with a co-signer who is.
- Once you choose a lender and apply for the loan (online or in person), the lender will notify you of the results of your credit check and, if approved, will notify our school of your loan request and approved credit. Most lenders won't notify our office until you have completed the application process and sign the promissory note. If our office has all the necessary information we will certify the loan and communicate with the lender directly to request disbursement. If we certify the loan prior to the beginning of the semester we will certify your loan as a full time student unless you request another enrollment status in writing. Please notify our office as soon as possible if you are not going to be enrolled full time. If we need any additional information we will contact you by e-mail to your UWW e-mail account or by paper to your address on WINS.
- If you have not applied for financial aid, our office will request you to either apply for financial aid or fill out the Private Loan Worksheet. We will not process your Private loan until this is done. If you fill out the FAFSA, we will process your private loan only after you have accepted or declined your financial aid.
- Please make sure the loan period is accurate. The loan period represents the period of time that you will need the loan funds. Providing a different loan period may delay the processing of your Private Loan. If the loan period is not clear we will contact you at your UWW email address for clarification. Any loan period other than academic year will reduce your loan eligibility. If you have any questions regarding loan periods, please contact our office.
- You must be enrolled at least half time to be eligible for most private loans. Some lenders, however, will approve loans for less than half-time status. Some of these lenders include Wells Fargo and Sallie Mae.
- Most lenders require students to meet Satisfactory Academic Progress (SAP). Some lenders, however, will allow students to apply without SAP eligibility. Some of these lenders include Sallie Mae, Wells Fargo, and UW Credit Union.
- Once the funds are disbursed to our school, your student account will be credited with the loan funds. These funds will be applied towards tuition, room & board, fees and other charges. Remaining amounts will be refunded to you. You can receive your refund as a check via US Mail or you can sign up for e-Refunding to have the funds directly deposited into the bank account of your choice. Checks are mailed to the local address while school is in session; when school is not in session, checks are mailed to the home address.
Loan Periods for 2012 - 2013
|Loan Period||Disbursement Begins on:|
|Academic Year||9/4/2012 - 5/22/2013||8/29/2012 & 1/14/2013|
|Fall Only||9/4/2012 - 12/21/2012||8/29/2012|
|Spring Only||1/22/2013 - 5/22/2013||1/14/2013|
|Summer||5/28/2013 - 8/16/2013||5/29/2013|
Loan Periods for 2013 - 2014
|Loan Period||Disbursement Begins on:|
|Academic Year||9/2/2013 - 5/20/2014||8/28/2013 & 1/13/2014|
|Fall Only||9/2/2013 - 12/23/2013||8/28/2013|
|Spring Only||1/21/2014 - 5/20/2014||1/13/2014|
|Summer||5/27/2014 - 8/15/2014||5/28/2014|
The maximum amount that a student may borrow cannot exceed the cost of attendance minus any other aid. Your cost of attendance information is available in your WINS account. To view your cost of attendance information follow these steps:
- Log in to your WINS account
- Click on Student Center
- Under Finances click View Financial Aid
- Select the aid year
- Select the aid year you wish to view
- Click Financial Aid Summary
- The amount listed under "remaining need" is the maximum amount you can borrow.
You are encouraged to borrow only the amount necessary to cover that portion of your educational expenses that cannot be covered by other means. Please keep in mind Private Loans can only be used to cover educational expenses. Never borrow more than you can comfortably repay. Once you accept a Private Loan, you have a legal obligation to repay the loan, all applicable fees, as well as the interest that has accrued.
Past Due Balances
Only a few lenders allow students to apply to cover a past due balance from previous years. Make sure to check with your lender to see if this is an available option. Some of the lenders that allow loans for previous years are:
- UW Credit Union - Past due balances up to 6 months
- Sallie Mae - Past due balances up to 12 months
- Chase Bank - Past due balances up to 12 months (available only to current Chase Bank customers)
Private Loan fees vary from lender to lender. Most Private Loans come with one-time fees that represent a percentage of your requested amount. Your credit score often determines the size of these fees. Fees usually come in two forms:
- Origination Fees: These fees are either added to (or deducted from) your total loan amount when funds are disbursed to the school.
- Disbursement Fees: These fees are added to your loan amount when you enter repayment.
Some lenders offer loans with no fees for borrowers who qualify.
Most Private Loans have a variable interest rate, based on either the Prime Rate or LIBOR. Some lenders now offer fixed interest rate loan programs, as well. Your co-signer and/or your own credit score will determine your interest rate. We recommend that you obtain your credit score prior to applying. To obtain a free credit report visit www.annualcreditreport.com. Interest accrues on Private Loans from the date of disbursement.
- Prime Rate: The lowest interest rate charged to creditworthy customers. If your interest rate is based on Prime, it will typically change the first of each month
- LIBOR: The interest rate the banks charge other banks to borrow money. If your interest rate is based on the 3-month LIBOR, it will typically change the first of each quarter.
For example, if your loan has an interest rate of LIBOR + 2.55%, and LIBOR is 4.00%, your interest rate is 6.55%. As long as you hold your Private Loan, interest will continue to accrue to your total loan amount. Percentage points may be added to (or subtracted from) these rates and your lender may use an average rate over a specific period instead of actual current rate. The formula used to determine your variable interest rate will be described out on the promissory note you must sign to accept the loan. Make sure you know your interest rate information before signing the promissory note.
Credit Report and Credit Scores
A credit report is a way of tracking your debts, loans and credit, and measures a number of things. How in debt are you? How well do you pay your obligations? How long have you been managing your debt? Have you applied for and received a lot of new loans or credit recently? What kind of credit or loans have you been extended?
Lenders use your credit report to determine if they want to approve your loan or credit card and what kind of interest rate they'll offer you. The better your credit report is, the better chance you'll have of getting a loan when you need it at a good interest rate.
A credit score can range from around 300 to 850. An "A" score is 720 or higher. A score from 680 - 719 is considered "B". Scores down to 650 or 660 are "C". Going below 650 is something you want to avoid.
Credit scores are based on several factors:
- Payment History - 35%
Paying your bills on time is essential, and not just your credit cards. Did you know that your electric or gas company, phone company and your cable company can all report on your credit report if you pay them late? Payments made more than 30 days late can be reported on your credit report and take a toll on your credit score. If your credit history is relatively short (less than 5 years), it will have a much larger impact on your score.
- Amounts Owed - 30%
A good rule to follow for credit cards or lines of credit is to keep your balances at 50% or less of your credit limit. For example, if the limit on your credit card is $1000, keep your balance under $500. Once you go over that 50% threshold, it starts to look like you are unable to manage your spending and your score will be affected.
- Length of Credit History - 15%
A good score takes time to establish. This is why managing your credit is really important while you are in college. Lenders are hesitant to extend credit to someone who has not yet shown how well they repay their debts. You have 4 years to build a positive history. The longer you have a positive credit history the better.
- New Credit - 10%
If you get several new credit cards over a short period of time, it is going to hurt your score. Shop wisely when it comes to the credit you apply for. Be wary of the seemingly endless "special offers" you receive from lenders just for applying. Having a credit card or two for emergencies and to establish you credit history isn't a bad thing. Having six or seven credit cards can be.
- Types of credit - 10%
Do you have a healthy mix of credit? A healthy mix of credit could include a student loan, a credit card or two, a line of credit (like overdraft protection for your checking account), and a car loan. Having only seven credit cards, regardless of your limits and balances, is not considered a healthy mix of debt.
Repayment typically begins six months after you graduate, drop below half time or withdraw from school. However, some Private Loans begin repayment immediately after disbursement, so be sure to compare different loan programs. Contact your lender for more information.
Questions to ask lenders before applying
- What is the lowest interest rate and fee combination that you offer? How can I get that rate?
- What is your interest rate based on?
- If the interest rate the lender is offering is variable, is there a limit on how high the rate can go?
- How often is the interest rate adjusted, and how is it determined?
- How much is the origination fee?
- What is the maximum amount I can borrow per year?
- What is the minimum amount I can borrow per year?
- Can I borrow the money to cover past due balances from a previous school term(s)?
- How long will I be repaying the loan? Is there any penalty for paying off the loan early?
- When does repayment begin?
- How long can I defer payments while I'm in school? What if I go to graduate school after my bachelor's degree?
- If I do not make payments while in school, how much will I owe?
- Are your discounts guaranteed, or are they subject to change later?
- What is your policy on co-signer release?
- Can the loan be consolidated with other loans?
Your Rights and Responsibilities
As a borrower, you have the right to:
- Receive a copy of your promissory note
- Receive information on your interest rate, fees, capitalization, and repayment schedule
- Receive notice if your loan is transferred between servicing companies or is sold to another lender
- Receive notice when your loan has been paid in full
As a borrower, you are responsible for:
- Repaying your loan according to your lender's repayment schedule
- Contacting your lender or loan servicer when you:
- Can't make a monthly payment
- Change your name, address, or phone number
- Transfer between schools
- Change your anticipated graduation date
- Graduate, withdraw from school, or drop below half-time enrollment
**Remember to always keep written records of all forms, applications, and correspondence with your lender for the entire life of your loan.