Private Student Loans for Dental School

• Private student loans are not guaranteed by any government agency and are made through banks or finance companies. Advocates of these loans say they combine the best elements of the different government loans into one, especially in terms of offering higher loan limits. This allows you to easily fill the gap between your college expenses and your actual awards. Private loans, also offer a grace period with no payments due until after graduation that can be as high as 12 months after graduation.


• Similar to federal student loans, private student loans can be issued to the student, parents or legal guardians. They offer a higher borrowing amount and repayment is not expected until after graduation, but the interest accrues immediately.


• Private student loans may be used for any education related expense. In addition, most international students studying in the United States can get a private loan with a cosigner who is a United States citizen or permanent resident.

Most private student loan programs are tied to one or more financial indexes, such as the Wall Street Journal Prime rate or the BBA LIBOR rate, plus an overhead charge. Because private loans are based on the credit history of the applicant, the terms will vary from lender to lender. Students and families with excellent credit will generally receive lower rates and smaller loan origination fees than those with less than perfect credit. For many students, this is an advantage. Their families may have too much income or too many assets to qualify for federal aid, yet have insufficient assets and income to pay for college.

Practically every private student loan will carry an origination fee, a one-time charge based on the amount of the loan. These fees can either be deducted from or added to the total loan amount, often at the preference of the borrower. Some lenders offer low-interest, zero fee college loans, but these are usually given to those with high credit scores of at least 800. Also, while each percentage point on the front end fee gets paid once, the percentage point on the interest rate is calculated and paid throughout the life of the loan. Some suggest that this makes the interest rate more critical than the origination fee. But, there is an easy solution to the fee vs. rate question:

Legally, all lenders are required to provide a statement of the APR (Annual Percentage Rate) for the loan before you sign and commit to it. Unlike the "base" rate, this rate includes any fees charged and can be thought of as the "effective" interest rate including actual interest, fees, etc. When comparing private student loans, it may be easier to compare APR rather than "rate" to ensure an apples-to-apples comparison. But, APR is the best yardstick to compare only those loans that have the same repayment term. If you have private student loans with different repayment terms, the APR becomes a less effective tool. Rather, look at the "total financing costs" to understand your financing options.

Generally, there are two types of private college loans: School Channel and Direct to Consumer

• School Channel Loans

School Channel loans offer borrowers lower interest rates. These types of loans are "certified" by the school who signs off on the borrowing amount. Funds are disbursed directly to the school.



• Direct to Consumer Loans

Direct to Consumer loans are not certified by the school. The student simply supplies enrollment verification to the lender, and the loan is disbursed directly to the student. While this type of loan generally carries a higher interest rate, they allow for faster access to funds. But, some opponents argue that the convenience is offset by the risk of over-borrowing and/or using the funds for other purposes. Nevertheless, Direct-to-Consumer private school loan programs are quickly becoming a large growing segment of educational finance programs. Some sources of direct to consumer private loans include:




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