As of 2010, both private lenders and institutions offering private loans to students must comply with a new set of regulations according to the Federal Reserve Board. Under the new laws, a lender offering private loans for post-secondary educational expenses must first provide a disclosure about loan terms and features at the time of application and must disclose information about federal student loan programs that may offer less costly alternatives.

If the initial application reaches an approval status, a second loan disclosure statement must be provided to the student at that time. If a student accepts the loan terms provided in the second disclosure statement, a third final disclosure must be provided when the loan is consummated. An additional piece of the new private loan regulations requires an applicant to complete a self-certification form and return it to the lender before they may disburse the loan to the school. The self-certification form may be found on the lender’s website. If you need assistance completing the form, contact the office of financial aid.

Each private lender may have a different application process, so it is best to contact your private loan lender directly if you have any questions. Generally, you will apply for a loan online and receive an application disclosure statement. You will then be asked to complete and return a self-certification form. If your loan is approved by the lender, you will be sent an approval disclosure statement.

Finally, each lender must provide you with a three-day rescission or right-to-cancel period after the final loan disclosure form is sent. The three-day rescission period means that once the school has certified your loan and it is ready to be disbursed, there is a mandatory three-business day waiting period before the lender may disburse funds to the school. If a lender only offers a mailed disclosure, then the lender must wait six days to disburse the loan to the school.

Private student loans are credit-based loans from individual banks that help students close the gap between the financial aid they have been awarded and any additional amount they may need to cover their educational expenses. Being approved for a private student loan depends largely on the credit score of the borrower and co-signer. With the continuation of tightened credit markets, the majority of students applying for private student loans will need co-signers on the application in order to get approved. While rates and repayment terms on private student loans are typically are typically less favorable than federal students loans, using private student loans are often a more wise financial decision than using credit cards or home equity lines of credit. However, it is ultimately the responsibility and choice of the borrower to make the best personal financial decision.

Private student loans may be an important source of funding for students who are in one of three situations:

• Ineligible for federal student loans
• Need funding beyond what a federal student loan program has offered
• Owe a balance to Furman from the previous academic year

For the 2017-2018 academic year, a prior year balance would be any balance on a student’s bursar account that was incurred before July 1, 2017. As of 2008, federal legislation forbids an institution from using financial aid funds from a current academic year to pay a previous year’s balance in excess of $200. If you fall into this category and are unable to pay the previous balance out-of-pocket, then you will need to consider applying for a private student loan to cover the balance.

While there is no requirement to include a co-signer, doing so often increases your chances of being approved for a private student loan and potentially lowers your initial fees and interest rates. Most lenders require student borrowers to have an excellent credit history among other criteria, so it is in your best interest to have a knowledgeable and willing co-signer to assist you in applying for a private student loan in most cases. Understanding that co-signers don’t want to feel financially responsible throughout the life of the loan, many lenders now offer co-signer release options after a certain number of on-time payments have been made. At that time, the borrower will need to pass a credit check.

Generally, there are four steps to apply for a private student loan. Keep in mind each lender may have its own requirements. Make sure your Free Application for Federal Student Aid (FAFSA) is sent to Furman. Furman’s Title IV code is 003434.

• Complete the FAFSA and accept your maximum amount in federal student loans.
• Consider applying with a creditworthy co-signer to increase your chances of approval and potentially lower your interest rate.
• Review the Furman historical private lender list to compare loan products.
• If approved by a lender, the student and co-signer will need to review the master promissory note and return it to the lender. Most lenders offer an e-sign option online.
• Complete the Self Certification Form
• Loan proceeds will be sent directly to Furman. The proceeds will be applied to the student account to clear any balances, and remaining funds will be direct deposited upon completion of a refund request.