Alternative / Private Loans Frequently Asked Questions (FAQ)

         

 

Are Private loans and Alternative loans the same thing?

 

Yes, they are the same. Alternative loan is another term for Private loan.

 

How do I apply for a Private Loan?

Select a lender and then apply online at the lender’s website.

 

What if I have bad credit, can I still apply for a Private loan?

Approval of a Private student loan is based on having good credit, since all private loans are credit based. Obtaining a qualified co-signer will help you in getting approval for the loan.

 

Do I need to complete the FAFSA in order to qualify for a private loan?

No. However, it is advisable to complete a FAFSA each year, to ensure that you take advantage of grants and other federal aid, if you are eligible to receive them.

 

Do I need to be enrolled at least half time to receive a private loan?

Most lenders require that to be eligible for a private loan you have to be enrolled at least half-time or more. Some lenders may make provisions for fewer credits, but overall, you will need to consult your lender before applying for the loan.

 

If I had a private loan last year, do I have to reapply again this year?

 

Yes. You have to reapply each academic year for a private loan.

 

Which private lender should I borrow from?

A list of lenders is provided on Morgan State University website for which students can select a lender. You can choose to borrow from other lenders that are not on the list. We are restricted legally from selecting a lender for you.

 

Why do I have to complete the “Self Certification Form?”

The Self Certification Form is used by lenders to satisfy the Higher Education Opportunity Act of 2008 and the amended Act of 2010. It requires that before a lender can disburse loan funds to a borrower, the lender must receive a completed and signed self certification form from the borrower.

 

What if my loan is denied, who should I contact?

You should contact the lender if your application was not approved. You should also have received a letter explaining why your loan was denied. If possible, you may need to supply additional information and then reapply. Adding a credit-worthy co-signer could also improve your chances of getting approved for the loan. Otherwise, you may need to apply to another lender.

 

 

 

How soon after I apply for the loan, can I receive the disbursement?

After submitting all the required forms, you will have at least seven (7) business days before the loan is disbursed to the college. During those seven days, which is referred to as the “Cancellation period”, you have the opportunity to cancel your loan.

 

When do I have to pay back my private student loan?

Most lenders require that you begin repayment on your student loans six months after graduation, or if you dropped out of school. It is also determined by the type of student loan that you applied for and the repayment plan that you have chosen. Consult your lender for more information on repaying your loan.

 

What will my interest rate be?

Interest rates for private loans are usually variable, which means the rates fluctuate over time. They are based on a specific index, such as, the Prime Rate or LIBOR and borrowers are required to pay a certain margin over that index. Your interest rate will depend on your credit history and also that of your co-signer. Typically, as the index rise or fall it affects the interest rate on the loan.

 

Who should I contact about the status of my private loan?

You should contact the lender about the status of your application. At times, processing of an application is delayed because of missing information on the application, or required forms were not submitted.

Can I borrow a loan to cover a prior semester?

Some lenders offer loans to cover a previous school balance, but application has to be filed within a short time i.e. approximately 60 days

after the semester has ended.

For approval for this loan, student has to meet certain requirements, such as, (a) enrollment for the applicable semester or school year and (b) student has to be below their financial aid budget for the semester or school year.

The loans are also limited to the amount owed to the institution.

 

 

If I cannot get a co-signer, what are my options?

You can apply individually for the loan or try another lender. Applying for a loan with a co-signer, however, will improve your chances for approval and can qualify you for better interest rates.

You may also need to revisit your school Financial aid office for further assistance.