Information about Eligibility
- The Free Application for Federal Student Aid (FAFSA) is not required for private loans.
- Before applying for a private loan, we suggest first exhausting all federal student loan borrowing options. For more information, please visit the Federal Student Aid website.
- Lender requirements including credit approval, interest rates, repayment options, etc. vary, and are determined by each lender.
- Some lenders do not require students to be meeting Satisfactory Academic Progress (SAP). More information about SAP is available SAP page.
- Students have the right to borrow from any lender who participates in the program under which they are eligible to borrow.
- Processing times vary from lender to lender. To ensure loans are processed in time to meet the published university fee bill deadline, loan applications should be started as early as May.
Federal/Private Loan Comparison
|Conditions||Federal Direct (Student) Loans||Federal Direct Plus Loans||Private Education Loans|
|Responsible Party:||Student||Parent or Graduate Student||Student or Parent|
|Co-Signer:||No co-signer requirement||No co-signer requirement unless an endorser is needed (as a result of denied credit)||Required in most cases (as a result of denied or insufficient credit)|
|Interest Rate and Rate Caps:||Fixed rates for loans first disbursed on or after 7/1/18 and before 7/1/19: Subsidized and Unsubsidized for Undergraduates 5.05% Graduates Unsubsidized 6.6%.||Fixed rates for loans first disbursed on or after 7/1/18 and before 7/1/19: 7.6%. Same rate for all credit approved borrowers.||Variable rate set quarterly or monthly or fixed. Rate usually depends on credit score and is determined by the lender.|
|Accrued Interest:||Accrued interest capitalizes once at repayment on unsubsidized loans; subsidized loans do not accrue interest while the student is in school and during the grace period||Accrued interest capitalizes once at repayment||Accrued interest may be capitalized monthly, quarterly, or once at repayment|
|Loan Fees("up front" fees):||For loans with a first disbursement on or after 10/1/18 and before 10/1/19: 1.062%||For loans with a first disbursement on or after 10/1/18 and before 10/1/19: 4.248%||Depend on loan product and determined by lender.|
|Approval Criteria:||Credit checks are not done for these loans, so a student’s credit is not a factor.||Credit check based on federal standards; No debt-to-income ratios or credit scoring||Based on borrower’s (student, parent and/or co-signer) credit history and/or debt-to-income ratio. Usually considers credit scores.|
|Applying for a Loan:||Master Promissory Note is good for 10 years; No annual paperwork to complete||Master Promissory Note is good for 10 years; No annual paperwork to complete (unless an endorser is needed)||Must re-apply each year for additional funds|
|Annual Borrowing Limits:||Between $5,500 and $20,500 depending on grade level and dependency status||Up to the cost of education less any financial aid received||Borrower’s may borrow up to the full cost of education less financial aid awarded, depending on debt-to-income ratio and co- signer approval|
|Repayment:||Student is responsible. The principal, and interest in the case of a subsidized loan, are deferred until six months after the student ceases at least half-time attendance.||Parent or Graduate Student borrower is responsible; Repayment begins 60 days after loan is fully disbursed. May be deferred while the student is in school.||Borrower (student, parent and/or co-signer) is responsible. Repayment can be deferred up to six months after leaving school as determined by the lender|
|Payment Flexibility:||Income-sensitive; Graduated and extended repayment options are available||Income-sensitive; Graduated and extended repayment options are available||Payment options vary by lender|
|Payment Deferment Situations:||The federal government offers various repayment plans, deferment and forbearance, and at times loan forgiveness (i.e. canceled) if students meet certain conditions.||The federal government offers various repayment plans, deferment and forbearance, and at times loan forgiveness (i.e. canceled) if students meet certain conditions.||Limited deferment during unemployment or economic hardship (usually one year maximum); Payment may be deferred while student is enrolled at least half-time|
|Loan Forgiveness/Cancellation Situations:||Death, Disability, Work in certain designated public- school service professions||Federally insured against death and disability for both the parent and the student||Not federally insured; some lenders offer discharge in the event of disability or death|
Receiving Your Aid
Students meeting the eligibility requirements determined by their lender, in addition to meeting other eligibility requirements described on the Eligibility page, will have their private loan funds disbursed as soon as the lender provides the school with the approved funds. The timeliness of these disbursements may be impacted by the lenders required right to cancel period, which varies from lender to lender.
Students are encouraged to familiarize themselves with the terms and conditions provided by their lender of choice.
Lender Selection Policy
The University of Connecticut maintains a list of suggested private education loan lenders that we believe offer competitive pricing, easy loan processing, and strong customer service. Students may choose one of our suggested lenders or any other lender who participates in the private loan program from which they are eligible to borrow.
Our suggested lenders for the 2018-2019, 2019-2020, and 2020-2021 school years were selected via a competitive Request for Information (RFI). This RFI was sent to numerous lenders, advertised on the Connecticut and National financial aid association listservs, and posted publicly on the University’s website. Any lender participating in one or more student loan programs was eligible to submit a proposal.
Each loan program was reviewed independently and without regard to proposals submitted for other loan programs. We selected lenders for our suggested lender lists based on a points awarded system and committee discussion. Our suggested lender lists will be reviewed annually. Our ultimate goal was to find the lenders that offer the best possible benefits, both financial and service-based, for our students. The lender must notify the borrower that loan benefits will change if the student consolidates.
We advise students and parents to be educated consumers and compare the borrower benefits offered by the lenders on our Suggested Lender List with those offered by other lenders. The factors considered follow, in order of importance. Factors at the top of the list were weighed more heavily than factors at the bottom of the list.
We considered: Interest rate, immediate borrower benefits, borrower benefits that must be earned by the borrower, telephone customer service for the borrower, technical support, ease of loan processing for the borrower, ease of loan processing for the school and compatibility with our computer software, customer service for the school (i.e. assistance in resolving loan delivery issues), web-based services for borrowers, repayment services for borrowers, flexibility of the loan program to meet the needs of various student situations, deferment options, debt management and default aversion services.
The complete text of the Financial Aid Code of Conduct can be accessed on UConn's Policies & Procedures website.