Loan FAQs

• Choosing a Private Loan
• What should I look for in a Private Loan?
• What are some Repayment Incentives with Stafford Loans?
• Pre-approval
• Cosigner Requirement
• Interest Capitalization
• Repayment

Choosing a Private Loan
Private loans are through a lending institution and not part of federal government programs. Private loans are more expensive than federal government guaranteed loans and should only be used when all other options have been exhausted. Be sure you have applied for all available scholarships, grants, work-study, and federal loan programs offered by St. Mary's College before borrowing from a private loan program. Private loans are in the student's name and a co-signer is usually required. Once a complete application has been received, the lender will perform a credit check and will let you know within approximately five days if your application has been approved.

What Should I look for in a Private Loan?
Annual Percentage Rate (APR) - The APR is the annual cost of your loan including the effect of any fees and charges in addition to interest. The APR is determined based on the terms of the loan. The APRs will differ based on the terms and loan amount. Make sure you are comparing like loan amounts when comparing APRs to receive a true comparison. Note, if the rate is variable, the APR may increased after consummation of the loan. Take these terms and APRs into consideration when borrowing a private loan.

What are some Repayment Incentives with Stafford Loans?
Does the private loan reward borrowers who make payments on-time? For example, does a lender offer automatic 0.5% interest rate reduction for auto-debit?

Pre-approval
Do you need to know quickly if you qualify? Does the lender offer loan pre-approval over the phone or internet?

Cosigner Requirement
Does the loan have an annual aggregate limit? Can you afford to borrow within these limits? It's a good idea to borrow from the same lender each year, so make sure the loan can cover your costs throughout your entire education.

Interest Capitalization
If you choose not to pay the interest on your loan while you are in school, the interest may be capitalized (added to your principal balance). When is the interest capitalized? Annually? At repayment? If the interest is capitalized annually the loan is more expensive than if it is capitalized only once at repayment.

Repayment
Does repayment begin immediately or after you graduate or leave school? Make payments whenever you can afford to, but if you can't make regular payments while you're in school, you'll need to find a loan that doesn't require immediate repayment.