Private Loans

 

Private Education Loans

Private education loans are available to help families fill the gap in paying for college. They should never be your primary funding source. Exhaust all of your other options including our no interest payment plan, savings, summer work, work study and outside scholarships before you borrow any type of private education loan.

Federal student loans are generally considered to be a better option for most students when compared with private student loans. Simpson College will not certify a private student loan on your behalf until you have exhausted your federal and state student aid options.

Parents, before borrowing or co-signing a private student loan, please consider the Federal Direct Parent Loan for Undergraduate Students (PLUS) as an option. PLUS Loans enable parents to borrow a federal loan to help pay the students education expenses. Parents may borrow up to the cost of attendance minus other financial aid received. The interest rate is fixed at 7.21% and interest charges begin to accrue at disbursement. Repayment begins within 60 days of disbursement, or certain deferments may be available.
To apply for a PLUS loan go to www.studentloans.gov.

Federal Aid First

You should utilize your maximum federal financial aid eligibility before borrowing a private student loan. Simpson College has awarded you the Title IV loan and grant assistance that you are eligible to receive, except the Parent PLUS Loan. Private student loans should not be the primary source of funding. The terms and conditions of federal grant and loan programs may be more favorable that those of private student loans. Federal Title IV aid programs and maximum award amounts include:

PELL Grant – $300 to $5,730 Federal SEOG –$125 to $4,000 TEACH Grant –$1,000 to  $4,000 Perkins Loan – $1,000 to $5,500 Stafford Loan – $5,500 (first year); $6,500 (second year); $7,500 (third through fifth year); Independent students may be eligible to receive an additional $4,000 (first and second year) or $5,000 (third through fifth year); graduate students may borrow up to $20,500 per year Parent PLUS Loan – A parent may borrow up to the cost of attendance minus other aid received

Some Questions to Consider Before Selecting a Private Loan

The following are some of the questions that should be considered as you research private loan options.

  1. When should I apply for a private loan? It is recommended that you apply for a private loan four to six weeks before payment is due. Be sure to follow-up with the lender to ensure that you have completed all necessary paperwork. It is important to read all correspondence that is received from the lender as they often request additional information to fully underwrite a loan.
  2. What is the interest rate and how often does that rate change? Interest rates on private student loans are generally variable and can change monthly or quarterly. Most rates are determined by using a financial standard such as Prime or LIBOR plus a margin that is usually based on the creditworthiness of a borrower and cosigner.
  3. Is the lender charging fees for processing the loan? Some lenders charge up-front origination fees that are a percentage of the loan, while others may charge repayment fees. If fees are taken out of the loan proceeds, you are still responsible for paying back the full loan amount including the fees.
  4. Do I need a cosigner on the private loan? Most loans require a credit-worthy cosigner. Even if a cosigner is optional, one is recommended as it will usually yield a lower interest rate for the borrower.
  5. How often is interest capitalized on the loan? Capitalization is adding accrued interest to the principal balance. The more frequently a loan is capitalized, the costlier it will be to the borrower.
  6. Am I required to make interest payments on the loan while I’m in school? Some lenders do require interest only payments while the borrower is in school. Making these payments will reduce the overall cost of the loan and can be done even if the lender does not require it. If the lender is requiring these payments, it is important that you have the ability to make those payments.
  7. Does the lender have a yearly or cumulative (aggregate) borrowing limit? As you evaluate what you need to borrow over your four years, keep these limits in mind.
  8. Can I borrow from more than one lender? If possible, it is recommended that you stay with one private lender throughout your college career. This should make the process of repaying loans more efficient.
  9. Are there any borrower benefits associated with the loan? Many lenders offer benefits for a certain number of on-time payments, payments received through electronic funds transfer and even graduation. Some lenders also offer possible release of cosigners after making a certain number of on-time payments.
  10. What are the repayment terms on the loan? Generally, most loans have a six-month grace period after graduation before repayment begins. The length of repayment period varies by lender and usually ranges from 10 to 20 years.
  11. Can this loan be deferred while in graduate school? This will vary by lender, but most often they can be if the borrower is enrolled at least half time. Some lenders do have caps on the maximum number of months loans can be deferred.

2014-2015 Private Student Loan Preferred Lender List

A Simpson College education is one of the best investments you can make. Wise borrowing of federal and private student loans will enable you to pay for the education and living expenses necessary to become a college graduate. The office of financial assistance has entered into a preferred lender arrangement (PLA) in order to better serve our students and families. Federal and state regulations require Simpson College to provide the following disclosures:
Students may borrow from the lender of their choice and are not required to borrow from a lender on the preferred lender list. The office of financial assistance will process your loan application without delay regardless of your choice of lender.
• A great deal of care was taken in the selection of these preferred lenders. Each lender was evaluated through a formal request for information.
• The lenders on the preferred lender list were evaluated based on favorable loan terms including interest rate, fees and benefits. Additional criteria include the use by current and former students and a record of excellent customer service to the school and students.
• The lenders on the preferred lender list were selected based on favorable loan terms including interest rate, fees and benefits. Additional criteria include the use by current and former students and a record of excellent customer service to the school and students.
• The lenders selected on the preferred lender list are not affiliated.
• Simpson College adheres to a Code of Conduct which can be found at simpson.edu/financial-aid/code-of-conduct-for-educational-loans-summary/. 

Philanthropic Contributions from Preferred Lenders

Simpson College has received philanthropic contributions from lenders on the preferred lender list.  The philanthropic contributions were made without relation to education loans or placement on the preferred lender list.  Wells Fargo philanthropic contributions were matching gifts from Wells Fargo employees utilized through multiple funds, including the annual fund, capital projects, academic program support, endowment, athletic boosters, Greek Life and religious life support.  United Methodist Church philanthropic contributions were provided as scholarship support for students.

Preferred Lender 2013 2012 2011
United Methodist Church $16,000 $13,250 $16,000
Wells Fargo $7,391 $6,717 $9,991

 

View the 2014-2015 Preferred Lender List

 

Next Steps

After completing the loan application, your lender may require you to submit income and tax documentation.Federal regulations also require you to view and accept additional disclosures after the loan is approved.

Your loan funds will not be sent to the school and your loan will be canceled if the additional steps listed below are not completed in a timely manner.

1)    View and accept your Approval Disclosure

2)    View your Final Disclosure

3)    Complete a Private Loan Self-Certification Form

For additional information about private student loans, visit the website at http://simpson.edu/financial-aid/financing-your-education/loans/.