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Private Loans

Private education loans may have significant disadvantages when compared with federal education loans. We strongly encourage you to first borrow any federal loans for which you are eligible. The chart below will help you in understanding the differences between Federal and Private Loan funds.

2013-2014 Comparison Chart of Federal and Private Education Loans*


Federal Loans

Private Loans

Credit Check Required?

Direct Loan: No


Credit Score or Debt-to-Income considered?

Direct Loan: No


Co-Signer Required?

Direct Loan: No
Usually no

Usually yes

Deferment Options

Several options

Depends on lender

Grace Period

Direct Loan: 6 months

Depends on lender

Interest Rate: 2013-14

Undergraduate -Direct Loan Subsidized/Unsubsidized: 3.86%
Graduate-Direct Loan Unsubsidized: 5.41%

PLUS/GradPlus: 6.41%

Usually variable

Loan Fees: 2013-14

Direct Loan: 1.051%
PLUS: 4.204%

Depends on lender 

Flexible Repayment options

Many options available  

Generally none

Loan Forgiveness Options

Several options available  

Generally none

Penalties for Early Repayment


Depends on lender 

Choosing a Private Loan

When choosing a private education loan, you should compare the loan terms offered by several lenders in order to choose the best fit for your situation. A resource for finding active private education loan programs is When you choose your lender make sure that OLHCC is a participating school in their loan program.

Here are several points you should research when considering a private loan:

  • What is the interest rate; is it fixed or variable; is the rate capped?
  • What fees must be paid for this loan and when are they due?
  • How will I receive my loan funds?
  • When does repayment begin and is there a grace period?
  • What will my monthly payment be?
  • What will be the total cost if I use the full repayment period?
  • Are there penalties for early repayment?
  • Are there deferment, forbearance, or cancellation options?

Most private loan programs require our office to certify your eligibility before approving your loan. If you receive financial aid, you must notify our office of any private loans you borrow as it may affect your aid eligibility.

Truth in Lending Act

Under the Federal Truth in Lending Act (TILA), your lender must provide you with the following documents:

  • Self-Certification Form
    • The Private Education Loan Applicant Self-Certification form must be completed before receiving your first disbursement of loan funds.
  • Final Disclosure and Right-to-Cancel Period
    • After you signed your promissory note, the Final Disclosure Statement confirms the terms and conditions of your loan.  At the time that this final disclosure is delivered, your "right-to-cancel" period begins. During this period of three to six days, you may cancel the loan by contacting the lender. The lender cannot release the first disbursement of your loan funds until the end of the right-to-cancel period.