Private Loan Programs Frequently Asked Questions

Private Loan Questions

Questions to ask yourself before borrowing a private education loan

Did I complete and submit a Free Application for Federal Student Aid (FAFSA) or a California Dream Act Application (CADAA)?

Have I borrowed all of my Federal Direct student loans, my California Dream loans, or other loans awarded to me by the school? If I did not borrow these loans, then why not?

What is a private education loan?

How are private education loans different from a Federal Direct student loan, a California Dream Loan, or other loans awarded to me by the school?

Will I need a co-signer to apply for a private education loan? Do I have a co-signer if I need one? For the definition of a co-signer visit our Financial Aid Terms webpage.

How much can I borrow?

Questions to ask potential lenders before applying for a private education loan

What is the annual percentage rate?

Is the interest rate variable or fixed? If it’s variable, how often does it change? How much does it change each time? What is the maximum interest rate?

Are there fees charged on the loan?

What is the minimum amount I can borrow?

What is the maximum amount I can borrow?

What are the repayment and forbearance options?

Does the lender have enrollment requirements? (i.e., enrollment less than half-time is not accepted)

Does the lender require students to be meeting the school’s Satisfactory Academic Progress (SAP) requirements?

What other requirements should I be aware of before borrowing?

Does the lender have a minimum loan amount?

Can I cancel the loan any time?

I’m an international student. Can I apply for a private education loan?

Pro Tip: Create a spreadsheet to compare lenders you are interested in and include all the different variables you want to compare.

Private Education Loan Basics

Question: What is a private education loan?

Answer: Private education loans are education loans offered by banks, credit unions, state agencies, or schools and are credit-based, and have fixed or variable interest rates. (aka Alternative Loans, Private Loans, Private Student Loans) Private education loans can be stricter than their federal counterparts since they are offered by individual organizations. Federal loans might offer more flexible repayment plans whereas private education loans tend to be more rigid. It’s important to thoroughly research and plan before making any decisions.

Private education loans can help bridge the gap between your cost of attendance and other financial aid, which if borrowed carefully can benefit you.

Applications for private education loans are credit-based and most require a co-signer to ensure approval with the best interest rates and terms.

Interest rates, repayment terms, lender credibility, and customer service are a few of the important factors to consider when making your selection.

Question: How do I qualify for a private education loan?

Answer: Lenders have their own application and loan requirements. Before applying, contact the lender or lenders for eligibility criteria to see if you are likely to qualify.

Question: What is a co-signer?

Answer: For the definition of a co-signer visit our Financial Aid Terms webpage.

A co-signer applies for the loan just like the borrower, and if their credit meets or exceeds the lender’s requirements, it can help the borrower qualify for a lower interest rate.

Question: Can I apply for a private education loan any time?

Answer: Yes, most lenders allow you to apply at any time during the academic year and some lenders allow you to apply after the end of the academic year. Your eligibility for the loan may depend on your enrollment status and if you are meeting the school’s Satisfactory Academic Progress (SAP) requirements, so be mindful of your lender’s requirements.

Question: How do I find a private education loan lender?

Answer: Choosing a private education loan program is a personal decision based on your needs. To select a loan product that best fits your needs, you can start by checking out the UC System list of lenders to assist you. It allows you to compare lenders that specialize in your area of study, rates, and conditions. There are various comparison sites available such as Credible, Private Student Loans, Nerd Wallet, and others. Comparison sites enable you to view and compare multiple private loan opportunities in one place. There are many things to keep in mind, read more Student Loan Comparison Sites - Finaid.

Question: Are private education loans backed by the federal government?

Answer: No. Private education loans are not covered or backed by the federal government. And private education loans are not part of the federal student loan programs. Federal student loans are under the federal government while private education loans are owned by the financial institution that granted them.

Question: What is the difference between a federal student loan, a private education loan, a California Dream Loan, and other loans offered by the school?

Answer: The three main types of student loans are:

Federal student loans: These loans are funded by the federal government. To apply for these loans, you must first complete the Free Application for Federal Student Aid (FAFSA).
- May offer lower interest rates and interest rates are fixed
- May offer better terms, especially, the repayment plans
- Borrowing limits are lower
- The interest does not accrue on the federal subsidized loan during in-school, grace, and authorized deferment periods.
- Federal student loans do not require a credit check or cosigner
- Payments are usually deferred until after you graduate
- Click on comparison chart for a more in-depth comparison
Private education loans: These loans are provided by banks, credit unions, lenders, schools, and other agencies.
- Expect a credit check as part of the application process
- Most students will require a credit score yet often need a cosigner
- Interest rates can be fixed or variable and may differ from loan product to loan product
- Repayment options may differ
- Click on comparison chart for a more in-depth comparison
California Dream Loans: These loans are provided by UC San Diego and can be applied for by completing the California Dream Act Application (CADAA).
- May have a lower interest rate than a private education loan
- California Dream Loans do not require a credit check or cosigner
- Are considered subsidized loans. No interest accrues during in-school, grace, and authorized periods of deferment
- Are deferred until 6 months after your full-time or half-time enrollment ends
Other Loans Offered by the school

Question: Is the private education loan a personal loan?

Answer: No. It is not a personal loan. The private education loan involves, you, the school, and the lender or bank. A personal loan only involves you and the lender or bank. The loan funds from the private education loan must be sent directly to the school. The funds from a personal loan are given directly to you, the borrower.

Question: Do I need a private education loan?

Answer: Before applying for a private education loan, you should always start by completing the Free Application for Federal Student Aid (FAFSA) or the California Dream Act Application (CADA) to see what financial aid you may be eligible to receive. Myth: I don’t qualify for financial aid.

Private education loans are usually used to help bridge the gap between the cost of attendance (COA) and the other financial aid you receive. Your COA isn't limited to tuition — it includes other expenses associated with being a college student, such as books direct cost components in the budgets.

Direct Costs: Charges included in the cost of attendance that the student/family pays directly to the institution. Actual charges may vary by student. For example, students may have different housing options or may enroll in a part-time program.
Indirect Costs:Estimated expenses in the cost of attendance that are not paid directly to the institution.

For more information on each Cost of Attendance element visit our Financial Aid Terms webpage.

Question: Who can apply for private education loans?

Answer: Anyone can apply for a private education loan if they are enrolled in an accredited institution pursuing a degree or certificate. Eligibility requirements vary from lender to lender and most private lenders offer a variety of options when it comes to private education loans. There are private education loans for undergraduate students, but also specialized student loans for graduate students enrolled in medical, dental, business, law school, and other programs. There are also options for parents to take out private education loans on behalf of their student. Depending on the loan product you apply for banks consider a variety of factors when determining if you're eligible for a private education loan, including if you're attending an eligible school, if you meet enrollment criteria, your credit score, income, and if you meet the debt-to-income requirements (this is usually something only parents/cosigners need to worry about).

Pro Tip: To obtain a private education loan, applicants often need a cosigner to have a higher likelihood of loan approval.

Question: What do I need to apply for a private education loan?

Answer: The application process for private education loas may differ from lender to lender, but here is a general checklist of what you need to do:

Research your options: Compile a list of the lenders you've found and compare interest rates, fees, repayment options, eligibility requirements, and any other factors that may be important to you. Autopay (auto-debit) discounts or other types of discounts are all things you can consider when making comparisons.
Gather your information: Most private lenders will ask you for the following information and/or documents:
- Social Security number
- Recent paystub or other proof of income
- Any monthly housing payment you may have
- Your employer name/phone number/length of employment (if applicable)
- The name of the school you plan to attend
- Cost of attendance
- Any financial aid received (you can find this on the financial aid offer letter from your school)
- Your anticipated graduation date/loan period/loan amount needed
- A cosigner is encouraged (but not mandatory) — if you have one, you'll need their name and email address

Pro Tip: Private education loans are offered at the sole discretion of the lender or bank, and approval is governed entirely by the lender’s internal procedures.

When applying for the loans through multiple lenders, try to do it within a 30-day period when checking your credit will only result in one credit inquiry instead of multiple inquiries which can lower your credit score with the credit agencies.

Pro Tip: Create a spreadsheet to compare your offer options. Make sure you read the fine print and learn as much as you can about how each loan works before you make your selection!

Question: How much should I borrow?

Answer: Most private student loans max out at your college's cost of attendance minus other financial aid. There may be borrowing limits for each lender as well. For example, let's say your college costs $50,000 per year and you have $40,000 available from financial aid and college savings. You only need another $10,000 and can apply for a private education loan to cover that amount. Under no circumstance can you be awarded more financial aid than your total cost of attendance. In this scenario, the school will certify the maximum amount of $10,000 no matter how much your loan was approved for. Certifying more will cause you to exceed your cost of attendance. You can look at your Financial Aid Offer letter in your student portal, MyTritonLink to see your cost of attendance or you can view all cost of attendance student budgets on our website.

It's important to only borrow what you need — you don't want to pay back more than you absolutely must!

You may have the option to borrow term by term or for the full school year. It's usually recommended to take out the loan for the full school year instead of taking out multiple loans, one for the fall quarter, one for winter quarter, and one for spring quarter. It can save you time, simplify the process, and you'll also have one credit check for the year.

If you have unexpected expenses and the reduction in the loan amount would result in a hardship, you may be eligible for a Special Circumstances - Cost of Attendance (COA) Appeal with appropriate documentation. Submission of a request does not guarantee approval.

Question: What should I look for when selecting a private education loan or lender?

Answer: This is a decision that will vary based on whatever loan is the best fit for you and your financial situation. Some factors you should take into consideration are:

Interest rate/APR: What is the lowest interest rate and annual percentage rate (APR) on the loan? Is the interest rate fixed or variable? If it’s variable, how often is it adjusted? How often is the interest capitalized? Is there an interest rate cap? You'll want to look for competitive rates, but keep in mind that factors like repayment type, repayment term, and rate type will impact it, in addition to many others.
The credibility of the lender: Seek out well-known lenders that have a strong track record of being reliable and trustworthy.
Perks: Will there be a discount if you open a checking account at the financial institution or if you use autopay? A lot of banks offer autopay and loyalty discounts if you're an existing customer, so make sure you investigate that!
Customer service: Should you wish to see someone in person, are you able to head over to a branch for personalized customer service?
Fees: Be sure to do your research and read the fine print. Are there any origination, disbursement or other fees associated with the loan?
Repayment options: What are my repayment options? Do I have to begin repayment while in school? When will repayment on my loan begin? Are there penalties for paying on or paying off my loan early? Will I get a repayment schedule that shows how long I repay on the loan? Are there deferment options while I’m in school and/or when I begin repayment?
Grace periods: Do I have a grace period with this loan before I begin repayment? If yes, how long is the grace period?
Enrollment requirements: Are there any enrollment requirements (e.g., HT, FT, etc.)?
Loan amount: What are the minimum and maximum loan amounts available?
Co-signer release: Is there an option to release the co-signer later?
What type of payments can I make: Can interest-only payments be made while in school without penalty?
Billing: Does the lender offer combined billing of alternative and federal loans?
Credit decisions: What is the turnaround time for credit decisions and disbursement of funds?
Problem resolution: How are problems resolved? Does problem resolution occur in person, by phone, or by email?
Web access: Is there access to my loan information through the web?
Selling loans: What is the lender’s policy on selling loans to other lenders after the loan has been disbursed?

Question: What can private education loans be used for?

Answer: Approved educational expenses such as:
Tuition and Fees
Housing expenses
Books, supplies, and equipment
Transportation to and from school
Miscellaneous personal expenses (e.g., groceries)
Dependent care expenses

Question: What kinds of things can the private education loan not be used for?

Answer: Car purchases
Furniture purchases
Nonessentials: high-end clothing, gym memberships
Vacation Travel
Paying for debt such as credit cards, auto and personal loans
Any purchase that is not considered an educational expense

How does the school process my loan?

Before Your Certification Request Can Be Processed:

Your financial aid file must be complete (FAFSA and CA Dream Act Applicants only).
You must have received, reviewed and accepted your Financial Aid Offer(s) (FAFSA and CA Dream Act Applicants only). Declining your federal loans will generate an automatic email sent to you to confirm your acceptance of the private education loan over the federal loan(s).
You must be enrolled in the minimum units required by your chosen lender. This applies only to lenders that require borrowers be enrolled in a minimum number of units at the time of certification.
You must be maintaining satisfactory academic progress or have an approved Satisfactory Academic Progress Appeal approval on file with the Financial Aid Office. This applies only to lenders that require borrowers be making satisfactory academic progress (SAP) towards completion of their degree.

If you do not have a social security number and you applied for a private alternative loan using a name other than the name associated with your UCSD student record you must contact the Financial Aid & Scholarships Office to self-identify for the certification request to be processed.

Question: What is a school-certified private education loan?

Answer: The University of California, San Diego is required by law to ensure the sum of private educational loans and other financial aid does not exceed your cost of attendance. If this total exceeds your cost of attendance, your loan may not be certified for the full requested loan amount and may be reduced to prevent your total aid from exceeding your cost of attendance. A private education loan requires the school to verify the amount you are borrowing by subtracting your total financial aid and loan amount from the cost of attendance.

Question: How does the school certify my loan?

Answer: The lender will send an electronic certification request to the school. The certification request will include the loan amount you requested and were approved for by the lender for the loan period you requested. The school will verify the amount that can be certified. The school will certify the loan, and the certification request is sent back to the lender electronically. The certification to the lender includes the certification amount and the school’s disbursement dates. This process can take several days to several weeks depending on the time of year.

Question: How does the school certify my loan?

Answer: After the certification is received by the school, the process can take 10–14 business days but may take longer during peak periods (August through October). Please note that this timeframe applies only to UC San Diego's processing and does not include any additional time your lender may require before submitting the certification request to the university.

Apply early enough to allow for the Right to Cancel period to end and to ensure your money arrives prior to the quarterly fee deadline.

Question: Why does it take so long to certify my loan?

Answer: The private education loan process takes longer than the federal student loan process. There are different rules that must be followed as set forth by each lender. The federal student loan process is handled between the school, the student, and the federal government. The private education loan starts with the lender, goes to the school, goes back to the lender, then the money is scheduled to be sent to the school after the lender’s Right to Cancel period has passed. The whole process takes more time than the federal student loan process to complete its cycle. Due to the extra time required to process, certify, and disburse on a private education loan, you should allow plenty of time.

Pro Tip: If you are applying for a loan for the academic year, starting the process too soon, may result in the loan accruing interest during the time we are not certifying loans. On the flip side, if you wait too late to apply for the loan, the money may not arrive in time to pay your fees by the deadline date. We usually begin certifying loans for each academic year in early August.

How does the school disburse the money?

Question: Do private education loan funds go to me or my school?

Answer: Your loan will be disbursed directly to the school, and then applied to your school charges. Remaining funds will be refunded to you and can be used toward approved educational expenses.

Question: When will the loan funds be sent to my school?

Answer: Based on when you apply for the loan, the disbursement may not arrive on the day it is requested due to lender’s Right to Cancel period and whether your funds will be sent electronically or by check. Award Year and Summer Loan Periods and Disbursement Dates

Question: What is the Right to Cancel Period?

Answer: The "Right to Cancel" period is the delayed disbursement period all lenders must follow. Lenders are required by California state law to give borrowers a minimum 3-day "Right to Cancel" period before they can disburse money to the school. This "Right to Cancel" period will begin after the lender receives the private education loan certification from the school and all other required documents have been submitted to the lender by the borrower. This period allows borrowers to cancel the loan without penalty within this timeframe. After the loan is certified, please contact your lender directly to find out the exact date your funds will be sent to the school.

Question: Does the Right to Cancel period apply to all private education loan disbursements?

Answer: No. It only applies to the first disbursement on each loan. All subsequent disbursements will arrive on the disbursement day set by the school.

Question: How does the lender send my disbursements to the school?

Answer: Most students and most lenders can send the money to the school using Electronic Funds Transfer (EFT). This means the funds are sent electronically to the school on the day they are scheduled to disburse. After the school receives the money, it usually takes 1-2 business days for the funds to be released and posted to your UC San Diego student account.

Question: Why are my disbursements being sent by paper check?

Answer: The school cannot receive Electronic Funds Transfer (EFT) for international students, students with no Social Security Number (SSN), or funds sent EFT in the parents’ name for parent private education loans. An SSN is required to send or receive the funds by EFT.

Parent Private Education Loans cannot be sent by EFT. Our system works using the student’s SSN. Parent Private Education Loans are processed under the parent’s SSN, which means these loans cannot be processed by our system electronically. The lenders will send their funds to a 3rd party disbursing agent, who produces a master check that is sent to the school. There are a couple of lenders who cannot participate in the master check process. These checks will be mailed directly from the lender.

Question: How long does it take to receive my funds by paper check?

Answer: The process can take between 2-4 weeks from the time the check is sent by the 3rd party disbursing agent or the lender for the funds to be received and posted to your UC San Diego student account. During busier times of the year, the process may be further delayed.

There are two check processes: 1) checks are received from the 3rd party disbursing agent and 2) checks are received directly from the lender. If the check comes from the 3rd party disbursing agent, they will prepare a master check and mail the check with a roster (list of students/borrowers) to the school. If the check comes directly from the lender, the lender prepares the check, and the check is mailed to the school. All checks are sent to the Student Financial Solutions (SFS) office. Checks are logged into a Checks System for review.

You and the Financial Aid & Scholarships (FAS) office are notified by email when the check has been entered into the Checks System and is ready for us to review and release the funds. The FAS office will review the disbursement to ensure it meets all requirements for release. If approved for release, the disbursement is scheduled to disburse to your UC San Diego student account. Our disbursement nights are Mondays, Wednesdays, and Fridays.

Question: Can I cancel the loan, and will there be penalties?

Answer: Maybe. Cancellation is generally not a problem for us; however, if you are cancelling the loan after the Right to Cancel period, which is generally after the disbursement date has been set and possibly after the funds have been sent to the school, we suggest you contact your lender first. You need to understand the terms and conditions for cancelling the loan. There may be penalties for cancelling the loan after the Right to Cancel period has passed. You should also contact our office prior to cancelling your loan to understand how cancellation may affect your student bill.

Question: If I cancel the loan, can I change my mind later and reinstate the loan?

Answer: Maybe. If you want to reinstate the loan after cancellation, we suggest you contact your lender first. You need to discuss the circumstances for reinstatement with the lender. Timing is key. Depending on the status of the loan at the time the request for reinstatement is made, the lender may or may not be able to reinstate the loan. If the lender agrees to reinstate the loan, they will contact the school by email or by sending an updated certification request. In some situations, the lender may require you to apply for a new loan.

Question: What can I do if my loan funds will not arrive in time to pay my fees?

Answer: There are other payment options available. Look at How to Pay Your Bill. Aside from these payment options, you can enroll in the university’s Triton Registration Installment Plan, referred to as TRIP. TRIP allows you to pay your quarterly charges in three monthly payments.

Pro Tip: TRIP does not cover housing charges.

Question: Why is my loan not certified for the amount that I borrowed?

Answer: The school cannot certify the loan for more than your cost of attendance (COA) minus other aid you already receive at the time the loan is certified. The school may reduce your loan amount to prevent you from exceeding your cost of attendance.

For example, your cost of attendance is $68,000. Your private education loan was approved for $68,000. Your other aid consists of a subsidized loan for $5500, an unsubsidized loan for $2,000, a university grant for $6,000, and a scholarship for $,1000. The total aid you were awarded is $14,500. After subtracting $14,500 from $68,000, your remaining eligibility is $53,500. This is the maximum the school can certify the loan.

Question: Why is my disbursement being reduced?

Answer: You cannot receive more than your cost of attendance minus other aid at the time the disbursement arrives. The school may reduce the loan disbursement prior to releasing your money. The school cannot release money that causes you to exceed your cost of attendance.

For example, your cost of attendance is $68,000. The spring disbursement of your private education loan arrives for $17,834. Your total aid was $14,500 and is now $21,000. There is an increase in your aid by $6,500. The increase in your aid is now exceeding your cost of attendance. Exceeding your cost of attendance puts you out of compliance with the rules and regulations. To bring you back into compliance, we must reduce the private education loan spring disbursement by $6,500 from $17,834 to $11,334. The $6,500 will be returned to your lender to be applied back to your loan.

If you have unexpected expenses and returning the money would result in a hardship, you may be eligible for a Special Circumstances - Cost of Attendance (COA) Appeal with appropriate documentation. Submission of a request does not guarantee approval.

Question: Why was my loan not certified by the school?

Answer: Your loan may not be certified for one or more of the following reasons:

You do not have eligibility for the loan. This means you are fully funded with other aid up to your cost of attendance.

You are not meeting the lender’s requirements:

Enrollment requirements (e.g., must be enrolled half-time)
Not meeting our Satisfactory Academic Progress (SAP) requirements, if the lender requires it

Question: What are my options if my loan cannot be certified by the school?

Answer: It depends on the reason the loan cannot be certified.

If your loan cannot be certified for not meeting our Satisfactory Academic Progress (SAP) progress requirements, you should contact our office and ask about completing and submitting a SAP Appeal. Or you can cancel the loan and apply for a loan through a lender that does not have a SAP requirement.

Pro-tip: If your SAP Appeal is approved, you will be awarded other aid and may not need or want the private education loan.

If your loan cannot be certified for not meeting the enrollment requirements, your option is to enroll in more units if possible or cancel the loan and apply for a loan through a new lender that does not have an enrollment requirement.

If your loan cannot be certified for not meeting the lender’s minimum loan amount, your option is to cancel the loan and apply for a loan through a new lender that does not have a minimum loan amount requirement. Not meeting the lender’s minimum loan amount is usually the result of our office needing to lower the loan amount that can be certified.

If you cancelling the loan for not meeting the lender’s minimum loan amount would result in a hardship, you may be eligible for a Special Circumstances - Cost of Attendance (COA) Appeal with appropriate documentation. Increasing your cost of attendance may increase the loan back to the lender’s minimum loan amount. Submission of a request does not guarantee approval.