Be sure to access all federal loans available to you before taking on a private education loan.
Vermont State financial aid staff will reach out to any student who applies for a private loan without first completing a FAFSA (Free Application for Federal Student Aid). We want to make sure students are aware of their federal financial aid options, including loans, before processing their private loan. Once we have that conversation (by phone, email, or in person), if the student chooses to not complete a FAFSA we will process the private loan.
Private education loans are consumer loans made to individuals to help pay for college. They are provided by for-profit and nonprofit lending organizations and are not backed by the federal government. Lenders offer private education loans with different interest rates, fees, repayment terms, and approval requirements. We suggest that you carefully review each private education loan program to compare the terms and conditions before deciding which loan may be appropriate for your needs.
Most programs allow borrowers to delay payments during school and offer hardship deferments during repayment. These options often increase the total amount you will pay, because interest charges will accrue during deferment periods. Most private education loans require a cosigner (a person who promises to become legally responsible to pay your debt if you fail to do so). If you are considering a variable rate loan, understand that rate changes may not be in your favor and could result in an increased monthly payment.
Vermont State has not reviewed the loan programs for lenders offering private education loans. If you feel you need to apply for one, you can use web-based comparison tools to review different options. In addition, some state nonprofit agencies offer private loans (and may not be listed on these websites); call or visit your state agency website to see if they offer a private loan. Your local bank or credit union may also offer a private education loan. Vermont State does not keep a suggested lender list for private education loans and do not recommend one lender over another.
Apply Early and Plan Ahead
The new federal regulations described here extend the loan processing timeline. Meeting the deadlines for the specific steps will be critical to the successful and timely disbursement of your loan funds. The process will likely take a minimum of 30 days to complete and have the funds disbursed to the school. Please apply early and plan ahead.
- New Disclosure Forms – Lenders must provide required disclosures to the student and cosigner, if applicable, at three different times during the private loan origination process:
- Application and Solicitation Disclosure – Provided during the online loan application process or via mail included with the Promissory note.
- Approval Disclosure – Provided after the loan is approved and the lender has received the promissory note, the Application and Solicitation Disclosure and the Borrower Self Certification Form and the school certification. The applicant and any cosigner have 30 days to return the approval disclosure.
- Final Disclosure – Provided after the lender receives the Approval Disclosure from the borrower and any cosigner, indicating that the loan has been accepted by the student and the cosigner, if applicable. The loan will not disburse until at least 10 business days after this disclosure is received by the borrower and any cosigner. This is to allow the borrower the option to cancel the loan before it is disbursed.
- New Borrower Self-Certification Form – A credit-approved student borrower must submit a completed borrower Self-Certification form to the lender. This form requires information on your cost of attendance. If you have questions about filling out the form, please contact FinancialAid@VermontState.edu.
