Private educational loans are available to eligible students and are provided by nationally recognized lending or banking institutions. These are credit based loans, and it is recommended that students first complete the Free Application for Federal Student Aid (FAFSA) to be considered for the Federal loan programs prior to applying for an alternative loan.
For your convenience, comparative information is provided in an Alternative Loan Lender List for a sample of loans. This list is provided for informational purposes only, and you may select any lender of your choosing. You will not be penalized for choosing a lender not listed.
New Alternative Student Loan Requirements Effective February 14, 2010
New Federal regulations will impact how you apply for alternative student loans. These changes will require new disclosure forms and add new procedures that go into effect for all lenders on February 14, 2010.
All loans will now require a new Private Education Loan Applicant Self-Certification form. This form must be completed by the student, signed and returned to the lender before any funds can be disbursed. Your lender may provide a blank form to you as part of the application process. For your convenience, you may also download a form from this website by clicking on the link to the right. You may also contact our office to speak with a counselor if you have any questions on how to complete this or if you would like to discuss your loan options in greater detail.
All loans will now require three new loan disclosure statements. The lender must provide an application disclosure, an approval disclosure and a final disclosure. You will receive these throughout the application process. Keep these disclosures in your files for future reference.
A new "rescission period" is now mandated by the federal regulations. The intent of the rescission period is to allow borrowers a final opportunity to evaluate their needs for a private student loan and/or cancel the loan without penalty. Lenders cannot disburse funds until the end of the rescission period so schools will not be able to schedule disbursements until the expiration of the rescission period. To allow for applicants and cosigners to receive the Final Disclosure in the mail, the first date that a loan can be scheduled for disbursement may be a week or longer from the date that the lender mails the Final Disclosure. The actual time frame for disbursement will vary from lender to lender.
Tips for Comparing Lenders
We have established the Alternative Loan Lender List as a starting point to help make sense of the loan information that is available. However, you are responsible for comparing these terms and selecting the loan that will best meet your needs. You are not required to select a lender from the lender list, and you will not be penalized for selecting a lender not listed here. The following are some tips for you to consider when evaluating your options.
What is the interest rate on the loan?
Are there any fees for the loan?
Some common names are origination fee, disbursement fee, or default fee. Some lenders may have a sliding scale based on the strength of your credit.
Are there any front end or back end benefits?
Front end benefits are discounts offered up front when the loan is disbursed. This can be a reduction of fees or a rebate. Back end benefits are discounts offered when the student goes into repayment. These might include an interest reduction for auto-debit payments. It is best to focus on discounts which you can't lose or on discounts that are immediate. Be aware of fine print that requires you to repay a fee rebate if you consolidate with another lender.
How long will it take to process the loan?
Find out from your lender how long it typically takes to process a loan application and whether it is a paper process or an electronic process. A paper application process can take 6-8 weeks if an original document needs to be mailed back and forth.
What kind of customer service will be provided?
Lenders can let you know their average response time and satisfaction ratings. Many lenders will also now provide self-service options via telephone or the internet allowing you to get information on your loans even faster.
Will my loan be sold to a different lender in the future?
Some lenders will hold the loan for the life of the loan, guaranteeing you their service until you finish repayment. Other lenders may sell your loan to a new servicer.
Step by Step Application Process
You may begin the application process any time after May 1, 2009, for the 2009-2010 year.
Submit a loan application directly to the lender of your choice. Please be sure to indicate that you will be attending American University. Applying with a credit-worthy co-borrower can enhance your credit rating and lower your interest rate and fees.
The maximum loan amount is the amount of the total Cost of Attendance (COA) not covered by other financial aid. You should apply for the amount you will need for both the Fall 2009 and Spring 2010 Semesters. Your lender will disburse the loan proceeds to American University in equal disbursements each semester.
Your lender will complete a credit check and advise you of the decision. If, for any reason, you feel that you may have difficulty with this credit check process, please contact the Financial Aid office at 202-885-6100 to discuss your alternatives. It is important, given the lengthy processing time, that you explore your options and have a back-up plan in the event your loan application is not approved.
After initiating your application with the lender, a pre-printed promissory note will be mailed to you. Sign and return the promissory note to the lender. You may sign your promissory note electronically via your lender's website. A signed promissory note is required prior to disbursement of loan funds.
Once approved, your lender will forward your application to the Financial Aid office at AU. We will certify the loan to verify your enrollment and eligibility and return the data to your lender.
Loan funds will be applied to your student account when American University receives them from your lender. Funds will be sent to AU via a paper check. You will be notified by the Student Accounts office if this check requires your endorsement. Student enrollment is verified prior to disbursement.
As loan processing depends on operations inside and outside of AU, please allow 6-8 weeks processing time. Please contact your lender with status inquiries