Private loans allow you to borrow up to your Cost of Attendance (COA) for any education-related expenses, including tuition, books, room and board. You should only borrow what you need since you will have to pay it all back. Once approved, a check arrives in the mail within days directly to you – not to the school.
More details on private loans...
Private loans usually consist of a principal (eg, $10,000), an interest rate (eg, 9%), and an origination fee (eg, 4%). The principal is the amount of money you get. The interest rate is the amount by which the principal increases until you pay it back. The origination fee is a one-time cost that lenders charge; it can be thought of as a processing fee and is typically added to the loan amount. There are various monthly payment calculators that can help you compare the different private loan offerings.
Most lenders allow 3 options of repayment:
- Immediate repayment – monthly payments begin while you are in school. When you graduate, your loan balance will be less than $10,000 (since you paid off some of the principal and the accruing interest)
- Interest only payments – monthly payments begin while you are in school. When you graduate, your loan balance will be $10,000 (since you paid off the accruing interest)
- Deferred loan – monthly payments do not begin until ~6 months after you graduate. When you graduate, your loan balance will be greater than $10,000 (since interest accrued in college)
Most students elect to take out private loans for each year of attendance, since interest begins accruing at loan disbursement.
Get started shopping for private loans with Embark now.